The times interest earned ratio is calculated by dividing
A)net income by interest expense.
B)net income plus income tax expense by interest expense.
C)net income plus interest expense by interest expense.
D)net income plus interest expense plus income tax expense by interest expense.

Question

Quizplus · Accepted Answer

The times interest earned ratio is calculated by dividing earnings before interest and taxes (EBIT) by interest expense. EBIT is net income plus interest expense plus income tax expense.

The Times Interest Earned Ratio Is Calculated by Dividing