Selected income statement data follow for Harley Davidson, Inc., for the year ended December 31, 2016 (in thousands): Income before Provision for Income Taxes Interest Expense Statutory Tax Rate Provision for Income Taxes Net Income $1,023,911 $29,670 37% $331,747 $692,164 What is the company's times interest earned ratio? Select one: A. 34.5 B. 24.3 C. 17.8 D. 35.5 E. None of the above

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TomShelby TomShelby · Answer 1 · 2019-07-24T06:51:20+02:00

Answer:

D. 35.5

Explanation:

Times Interest Earned

[tex]\frac{EBIT}{Interest \:Expense}[/tex]

Where EBIT = Earning before interest and taxes

In your assingment we have the Income before the income taxes, whgich means it is including the interest expense, we need to remove it:

EBT + Interest expense = EBIT

1,023,911 + 29,670 =1,053,581

Now we calculate the TIE

1,053,581 / 29,670 = 35.50997641 = 35.51 = 35.5

The company earns their interest 35.5 times.