The higher the times interest earned ratio,the more likely:
A)a default in payment will occur.
B)a business needs to borrow money.
C)a business will suffer a loss.
D)interest payments can be made.

Question

Quizplus · Accepted Answer

The higher the times interest earned ratio, the more easily a business can make interest payments. This indicates that the business is capable of generating sufficient income to pay the interest on its outstanding debts, which is a positive sign for investors and creditors. Therefore, option D is the correct answer.

The Higher the Times Interest Earned Ratio,the More Likely