Auto Industries Company Reported the Following on Its Income Statement

Multiple Choice

Auto Industries Company reported the following on its income statement: $\begin{array}{lr}\text { Income before income taxes } & \$ 420,000 \\\text { Income tax expense } & \underline{120,000} \\\text { Net income } & \$ 300,000\end{array}$ ? If the income statement also shows interest expense equal to $80,000, what is the company's times interest earned ratio?

A) 5 times
B) 8 times
C) 5.25 times
D) 6.25 times