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charges were $12,500. What was the firms times interest earned dno ratio orps sales last year were $$10,000, its operating costs were $362,500, and its interest a. 11.80 b. 8.85 c. 13.10 d. 12.15 e. 14.75
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Answer #1

Answer: a

This is the capacity of payment of interest by a firm. Higher ratio is always desirable.

TIE ratio = (Sales – Operating cost) / Interest amount

               = (510,000 – 362,500) / 12,500

               = $147,500 / $12,500

               = 11.80

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