Asked by Spencer Hamer- on May 20, 2024
Verified
What was Lucas' times interest earned ratio?
A) 18.9
B) 19.4
C) 28.3
D) 31.0
Times Interest Earned Ratio
A financial metric assessing a company’s ability to meet its interest obligations from its operating income.
Income Tax Payments
Income tax payments are the amounts of money a company or individual must pay to the government, based on the income earned over a tax period.
Interest Expense
The cost incurred by an entity for borrowed funds, reflecting the interest payments on debts.
- Learn to determine and assess the value of the times interest earned ratio for analyzing an entity's financial health.
Verified Answer
RK
Rohan KapurMay 23, 2024
Final Answer :
B
Explanation :
Times interest earned = (Net income + Interest expense + Income tax expense)/Interest expense
= (306,000 + 30,000 + 246,000)/30,000
= 19.4
= (306,000 + 30,000 + 246,000)/30,000
= 19.4
Learning Objectives
- Learn to determine and assess the value of the times interest earned ratio for analyzing an entity's financial health.