Earnings before interest and tax, EBIT = $38,218
Net Income = $14,042
Tax rate = 34% = 34/100 = 0.34
Times Interest Earned Ratio = [tex] \frac{EBIT}{Interest Expense} [/tex]
= [tex] \frac{38,218}{38,218-[14,042/(1-0.34)]} [/tex]
= [tex] \frac{38,218}{38,218-(14,042/0.66)} [/tex]
= [tex] \frac{38,218}{38,218-21,275.76} [/tex]
= [tex] \frac{38,218}{16,942.24} [/tex]
= 2.26
Therefore, the times interest earned ratio is 2.26
