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calculation of interest earned ratio

Question

Bayside Inc.

2008 Income Statement

($ in thousands)

 

                              Net sales                                    $ 5680                     

                      Less: Cost of goods sold                    4060

                      Less: Depreciation                               420

                     Earnings before interest and taxes        1200

                     Less: Interest paid                                   30

                    Taxable Income                                   $ 1170

                     Less: Taxes                                            410

                     Net income                                          $   760

 

Bayside, Inc.

2007 and 2008 Balance Sheets

($ in thousands)

 

                              2007      2008                                                      2007        2008

Cash                       $ 70       180                 accounts payable          $ 1350     $ 1170

Accounts rec.         980        840                 long-term debt               720         500

Inventory               1560      1990                 common stock             3200        3500

Total                     $ 2610     3010              retained earnings            940         1200

Net fixed assets     3600       3360          

Total asset            $ 6210      $ 6370          total liabilities & equity $ 6210      $ 6370       

 

What is the times interest earned ratio for 2008?

a. 30

b. 36

c. 40

d. 50

e. 54

 

 

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