Problem:
For the most recent year, Grohl, Inc., had sales of $440,000, cost of goods sold of $219,100, depreciation expense of $58,800, and additions to retained earnings of $51,000. The firm currently has 25,000 shares of common stock outstanding, and the previous year's dividends per share were $1.25.
Required:
Question: Assuming a 34 percent income tax rate, what was the times interest earned ratio?
Note: Provide support for your underlying principle.