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20 April, 07:20

Creighton Company reported the following on the company's income statement for the year. Interest expense $600,000 Income before income tax expense 4,200,000 What is the times interest earned ratio? a. 7.0 b. 8.0 c. 6.0 d. None of these choices are correct.

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  1. 20 April, 09:06
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    The correct answer is A.

    Explanation:

    Giving the following information:

    Interest expense = $600,000

    Income before income tax expense = 4,200,000

    To calculate the interest earned ratio we need to use the following formula:

    Times interest earned ratio = earnings before interest and tax / interest rate

    Times interest earned ratio = 4,200,000/600,000 = 7
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