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Question
Balance sheet and income statement data indicate the following:
Bonds payable, 6% (this is Year 4 of 20 years) $1,000,000
Preferred 8% stock, $100 par
(no change during the year) 200,000
Common stock, $50 par
(no change during the year) 1,000,000
Income before income tax for year 340,000
Income tax for year 80,000
Common dividends paid 60,000
Preferred dividends paid 16,000
Based on the data presented above, what is the times interest earned ratio (round to two decimal places)?
a. 5.25
b. 6.67
c. 4.66
d. 4.83
Answer
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