The times interest earned ratio is computed by dividing
A) net income by interest expense.
B) income before income taxes by interest expense.
C) income before interest expense by interest expense.
D) income before income taxes and interest expense by interest expense.

Question

Quizplus · Accepted Answer

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

The Times Interest Earned Ratio Is Computed by Dividing