Numbers of times interest charges are earned is computed as
A)Income Before Income Taxes plus Interest Expense divided by Interest Expense
B)Income Before Income Taxes less Interest Expense divided by Interest Expense
C)Income Before Income Taxes divided by Interest Expense
D)Income Before Income Taxes plus Interest Expense divided by Interest Revenue

Question

Quizplus · Accepted Answer

The times interest earned ratio is calculated by dividing income before income taxes and interest expense by the interest expense. This measures a company's ability to meet its interest obligations.

Numbers of Times Interest Charges Are Earned Is Computed as