Use the information in E13-3 to complete the following requirement.

Required:
Compute the times interest earned ratios for 2010 and 2009. In your opinion, does Computer Tycoon generate sufficient net income (before taxes and interest) to cover the cost of debt financing?

2010 2009 Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income $100,000 60,000 40,000 36,000 500 3,500 1,000 $ 2,500 $120,000 71,500 48,500 37,000 475 11,025 5,000 $ 6,025