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Question
Balance sheet and income statement data indicate the following:
| Bonds payable, 10% (due in 2 years) | $1,000,000 |
| Preferred 5% stock, $100 par (no change during year) | 300,000 |
| Common stock, $50 par (no change during year) | 2,000,000 |
| Income before income tax for year | 550,000 |
| Income tax for year | 80,000 |
| Common dividends paid | 50,000 |
| Preferred dividends paid | 15,000 |
Based on the data presented, what is the times interest earned ratio? (Round to one decimal place.)
a. 1.5 times
b. 6.4 times
c. 6.5 times
d. 5.5 times
Answer
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