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##### Assuming a 32 percent income tax rate, what was the times interest earned ratio?

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For the most recent year, Seether, Inc., had sales of \$439,000, cost of goods sold of \$219,200, depreciation expense of \$58,900, and additions to retained earnings of \$51,100. The firm currently has 24,000 shares of common stock outstanding, and the previous yearâ€™s dividends per share were \$1.45.

Assuming a 32 percent income tax rate, what was the times interest earned ratio?

Oct 20th, 2017

Net sales  =  \$439,000

Less: Cost of Goods Sold  =  \$219,200

Gross Profit                        =  \$219,800

Les: Depreciation Exps     =  \$58,900

Net profit                             =  \$160,900

Dividend paid as per previous year  =  \$1.45

Therefore total Dividend paid   =  No of common stock  X  Dividend per share

=  24,000   X   1.45

=  \$34,800

Tax payment   =   160,900  X  (32/100)

=  \$51,488

Time interest Earned Ratio  =  Income before interest and Tax  /  Interest expenses

=  160,900 / 34,800

=  4.62 times

Apr 16th, 2015

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Oct 20th, 2017
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Oct 20th, 2017
Oct 21st, 2017
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