Answer (C) is correct . The times interest earned ratio equals income available to pay interest (net income + income taxes + interest expense) divided by interest expense. The
Answer (A) is incorrect because This figure uses after-tax income in the numerator.
Answer (B) is incorrect because This figure equals income before taxes divided by interest.
Answer (D) is incorrect because This figure results from adding selling, general, and administrative expenses to the numerator.
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Devlin Company’s times interest earned ratio for the year ended May 31, Year 2, was
