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