The Fortune Company Reported the Following Income for 2014 What Is the Company's Number of Times Interest Is Earned

The Fortune Company reported the following income for 2014: $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 130,000 \\\hline \text { Cost of goods sold } & 80,000 \\\hline \text { Gross margin } & \$ 50,000 \\\hline \text { Selling and administrative expense } & 15,000 \\\hline \text { Operating income } & \$ 35,000 \\\hline \text { Interest expense } & 5,000 \\\hline \text { Income before taxes } & \$ 30,000 \\\hline \text { Income tax expense } & 10,000 \\\hline \text { Net income } & \$ 20,000 \\\hline & \\\hline\end{array}$$ What is the company's number of times interest is earned ratio?

A) 7 times
B) 6 times
C) 4 times
D) None of these answers is correct.

Correct Answer:

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