a-company-has-an-operating-income-of-120000-and-an-interest-expense-of-40000-can

Question

A company has an operating income of $$120,000 and an interest expense of 40$$,000. Can the company cover its interest expenses from core operations?

Accepted Answer

Yes, the times interest earned ratio is 3, indicating coverage.

Answer

No, the times interest earned ratio is 0.5, indicating insufficient coverage.

Answer

Yes, the times interest earned ratio is 2, showing adequate coverage.

Answer

No, the times interest earned ratio is less than 1, showing inadequate coverage.

A company has an operating income of \$120,000 and an interest expense of \$40,000. Can the company cover its interest expenses from core operations?