Questions: Times interest earned is computed as net income plus interest expense, divided by interest expense income before income tax plus interest expense, divided by interest expense net income divided by interest expense income before income tax divided by interest expense

The answer is the second one: income before income tax plus interest expense, divided by interest expense.

Explanation for each option:

1. Net income plus interest expense, divided by interest expense: This is incorrect because net income includes the effects of taxes and other non-operating items, which are not considered in the times interest earned ratio.
2. Income before income tax plus interest expense, divided by interest expense: This is correct. The times interest earned (TIE) ratio is calculated by taking the income before income tax and adding back the interest expense, then dividing by the interest expense. This measures a company's ability to meet its interest obligations from its operating income.
3. Net income divided by interest expense: This is incorrect because net income is after taxes and other non-operating items, which do not reflect the company's ability to cover its interest expenses from operating income.
4. Income before income tax divided by interest expense: This is incorrect because it does not add back the interest expense to the income before tax, which is necessary to accurately measure the ability to cover interest payments.

Summary: The times interest earned ratio is computed as income before income tax plus interest expense, divided by interest expense. This ratio helps assess a company's ability to meet its interest obligations from its operating income.