Compute the cash basis times interest earned

Question

Response to the following problem:

Consider the following operating figures:

Net sales                                                              $1,079,143

Cost and deductions:

Cost of sales                                                           792,755

Selling and administration                                         264,566

Interest expense, net                                                 4,311

Income taxes                                                             5,059

  1,066,691  

$ 12,452                                                                                                             

Required:

a. Compute the times interest earned.

b. Compute the cash basis times interest earned.