A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000. Its times interest earned ratio is:

Times interest earned ratio is 3.5 times.

Explanation:

The times interest earned (TIE) ratio refers to a measure of the ability of company to honor its debt obligation form the current income of the company. TIE is also refereed to as interest coverage ratio and it can be calculated using the following formula:

TIE = EBIT / Interest expense (1)

Where;

EBIT = Earnings before interest and taxes = $350,000

Interest expense = $100,000

Substituting the values into equation (1), we have:

TIE = $350,000 / $100,000 = 3.5 times

This indicates that the income of the company is 3.5 times greater than its interest expense.

the third answer is correct.

answer; ///liability;