Orono Corp.'s sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned (TIE) ratio

Time Interest Earned Ratio (TIE Ratio) = 5.8 times

Explanation:

Time Interest Earned Ratio (TIE Ratio) = Income Before Interest and Tax / Interest Expense

Details Amount ($)

Sales 435,000

Less: Operating Cost 362,500

Income Before Interest and Tax (x) 72,500

Interest (y) 12,500

TIE Ratio (x/y) 5.8 times