In a recent year, Bonita Industries had net income of $757,000, interest expense of $157,000, and a times interest earned ratio of 7. What was Bonita Industries' income before taxes for the year?
d) None of these answers are correct.
The net income is used to calculate various ratios and also used to prepare the financial report of the company. It is calculated by preparing the income statement at the end of the period.
Answer and Explanation:
Using the formula of times interest earned ratio:
Times interest earned ratio = EBIT / Total Interest Expenses
7 = EBIT / 157,000
EBIT = $1,099,000
hence the correct option is b.
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
from Business 110: Business MathChapter 8 / Lesson 5