Tsao Company provided the following income statement for last year:
Sales.............................................. $1,400,000
Cost of goods sold................................. 550,000
Gross margin................................... $ 850,000
Operating expenses................................ 350,000
Operating income.............................. $ 500,000
Interest expense...................................... 50,000
Income before taxes........................... $ 450,000
Income taxes........................................ 135,000
Net income...................................... $ 315,000
Required:
Calculate the times-interest-earned ratio.