(Learning Objective 4: Computing the times interest earned ratio) Zigzag International reported the following data in 20X8 (in millions):
|
Net operating revenues |
$29.2 |
|
Operating expenses |
25.3 |
|
Operating income |
3.9 |
|
Nonoperating items: |
|
|
Interest expense |
(1.4) |
|
Other |
(0.2) |
|
Net income |
$ 2.3 |
Compute Zigzag’s times interest earned ratio, and write a sentence to explain what the ratio value means. Would you be willing to lend Zigzag $1 million? State your reason.