Question
The formula for the times interest earned is the sum of net income plus interest expense plus income tax expense divided by interest expense. This
The formula for the times interest earned is the sum of net income plus interest expense plus income tax expense divided by interest expense. This is a measure of solvency. The following amounts were taken from the financial statements of Smiley & Smiley Gifts: 2017 2016 Current liabilities $280,000 $220,000 Long-term liabilities 800,000 600,000 Interest expense 100,000 50,000 Income tax expense 120,000 58,000 Net income 300,000 170,000 Net cash provided by operating activities 480,000 270,000 How much is the times interest earned for 2017? Entry field with incorrect answer 3.0 times 4.0 times 5.2 times 4.8 times
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