19. Temple, Inc. has sales of $329,000, cost of goods sold of $204,000, depreciation of $5,900, and interest expense of $15,100. The tax rate is 34 percent. What is the times interest earned ratio? (Please calculate the arithmetic solution and show your work)

The times interest earned ratio measures a company's ability to cover its interest expense with its operating income. It is calculated by dividing the operating income by the interest expense.

To calculate the operating income, we subtract the cost of goods sold, depreciation, and interest expense from the sales.
Operating income = Sales - Cost of goods sold - Depreciation - Interest expense
Operating income = $329,000 - $204,000 - $5,900 - $15,100

Next, we calculate the times interest earned ratio by dividing the operating income by the interest expense.
Times interest earned ratio = Operating income / Interest expense

Now, let's calculate the values:

Operating income = $329,000 - $204,000 - $5,900 - $15,100
Operating income = $104,000

Times interest earned ratio = $104,000 / $15,100
Times interest earned ratio ≈ 6.92

Therefore, the times interest earned ratio for Temple, Inc. is approximately 6.92.

To calculate the times interest earned ratio, we need to determine the company's operating income and its interest expense. The formula for the times interest earned ratio is:

Times Interest Earned Ratio = (Operating Income / Interest Expense)

First, let's calculate the operating income:

Operating Income = Sales - Cost of Goods Sold - Depreciation

Given:
Sales = $329,000
Cost of Goods Sold = $204,000
Depreciation = $5,900

Operating Income = $329,000 - $204,000 - $5,900
Operating Income = $119,100

Next, we can calculate the interest expense:

Interest Expense = Selling Expenses - Taxes

Given:
Tax Rate = 34%
Interest Expense = $15,100

To calculate the Selling Expenses:

Selling Expenses = Interest Expense / (1 - Tax Rate)
Selling Expenses = $15,100 / (1 - 0.34)
Selling Expenses = $15,100 / 0.66
Selling Expenses = $22,878.79

Finally, we can calculate the Times Interest Earned ratio:

Times Interest Earned Ratio = Operating Income / Interest Expense
Times Interest Earned Ratio = $119,100 / $22,878.79
Times Interest Earned Ratio ≈ 5.2

Therefore, the Times Interest Earned ratio for Temple, Inc. is approximately 5.2.