Which of the following interprets the interest coverage ratio of RED Merchandising?
It takes 3.2 times to earn the interest charges payment.
It takes 2.9 times to earn the interest charges payment.
It takes 3.9 times to earn the interest charges payment.
It takes 2.6 times to earn the interest charges payment.
Extracted text: Use the financial statements below to answer the question. RED Merchandising Statement of Financial Position For the year ended December 31, 2021 Accounts payable P 321,750 Income tax payable Accrued expense 39,638 30,800 Current portion of L.T. debt 165,000 Cash P110,400 Deferred income taxes 151,853 Accounts receivable 634,800 Current liabilities P 709,041 Inventory 167,000 Long-term debt 81,028 Current assets P 912,200 TOTAL LIABILITIES P 790,069 Property & equipment, Net 297,100 Common stock 19,500 TOTAL ASSETS P1,209,300 Paid-in capital Retained earnings 43,100 356,631 TOTAL EQUITY P419,231 Total liabilities & equity P 1,209,300 RED Merchandising Statement of Comprehensive Income For the year ended December 31, 2021 Sales P 6,638,400 Cost of goods sold 6,008,700 Gross Profit P 629,700 Operating expenses Operating Profit 535,500 P 94,200 Interest expense 32,500 Income before tax Php 61,700 Тах 31,219 Net Income P 30,481