FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Healthy Eating Lifestyle (HEL) Inc.'s financial data is provided below.

 

 

 

 

 

 

 

 

 

Current liabilities

$

180

 

Income before interest and taxes

$

125

 

10% Bonds, long-term

 

360

 

Interest expense

 

36

 

Total liabilities

 

540

 

Income before tax

 

89

 

Shareholders' equity

 

 

 

Income tax

 

27

 

Capital stock

 

200

 

Net income

$

62

 

Retained earnings

 

280

 

 

 

 

 

Total shareholders' equity

 

480

 

 

 

 

 

Total liabilities and equity

$

1,020

 

 

 

 

 

 

Calculate HEL's times interest earned ratio is (Round your answer to two decimal places.). Show working.

Expert Solution
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Step 1

The time interest ratio is used to estimates the firms ability to meet out its debt obligation i.e interest expenses based on its operating profit.

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