Use the information given in the diagram, what is the Times Interest Earned (TIE) ratio?

Question

Answer

4 times in both 20X1 and 20X2 years

Answer

2 times in both 20X1 and 20X2 years

Answer

2.5 times in 20X1 and 2.17 times in 20X2

Answer

3 times in both 20X1 and 20X2 years

PC Hardware Limited
Income Statement for the year ended	20X1 ($)	20X2 ($)
Sales	56,000	67,000
Less Cost of Goods Sold	36,000	41,000
Gross Profit	20,000	26,000
Less Expenses	12,000	14,000
Net Profit before Interest and Tax	8,000	12,000
Less Interest	2,000	3,000
Net Profit before Tax	6,000	9,000
Less Tax	2,000	3,000
Net Profit after Tax	4,000	6,000

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