In a recent year, sherwood day corporation had sales of $500,000, net income of $200,000, interest expense of $40,000, and tax expense of $30,000. what was day corporation's times interest earned for the year?

The interest earned by the Sherwood Day Corporation is calculated by subtracting from the net income all the expenses including the interest expense and the tax expense. Mathematically,

interest earned = $200,000 - ($40,000 + $30,000)

= $130,000