The interest-coverage ratio is calculated by dividing pretax income plus interest expense by
A)total shareholders' equity.
B)total shareholders' equity and long-term debt.
C)total assets.
D)interest expense.
E)total current assets.

Question

Quizplus · Accepted Answer

The interest-coverage ratio is calculated by dividing pretax income plus interest expense by interest expense. This ratio measures a company's ability to make interest payments on its debt.

The Interest-Coverage Ratio Is Calculated by Dividing Pretax Income Plus