Calculate the Times Interest Earned Ratio Using the Following Information

Multiple Choice

Calculate the times interest earned ratio using the following information. Sales = $1.5 million, cost of goods sold = $800,000, depreciation expense = $100,000, addition to retained earnings = $85,000, dividends per share = $1.2, tax rate = 30 percent, and number of shares of common stock outstanding = 100,000. Assume the firm has no preferred stock.

A) 2.25 times
B) 1.25 times
C) 1.95 times
D) 2.75 times