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.

Answered: Healthy Eating Lifestyle (HEL) Inc.'s…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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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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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