Depreciation expense totals $200; operating lease payments total $150; and preferred dividends total

The Jones Petro Company reports the following consolidated statement of income:

Operating revenues

$2,989

Costs and expenses:

Cost of rentals and royalties

543

Cost of sales

314

Selling, service, administrative,

and general expense

1,424

Total costs and expenses

2,281

Operating income

708

Other income

27

Other deductions (interest)

60

Income before income taxes

675

Income taxes

309

Income before outside shareholders’ interests

366

Outside shareholders’ interests

66

Net income

$ 300

Note: Depreciation expense totals $200; operating lease payments total $150; and preferred dividends total

$50. Assume that 1/3 of operating lease payments is for interest.

Required a. Compute the times interest earned.

b. Compute the fixed charge coverage.