Holding all other variables constant, a decrease in the cost ratio would cause the times interest earned ratio to increase.

Name: Holding all other variables constant, a decrease in the cost ratio would cause the times interest earned ratio to increase.
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Question

Quizplus · Accepted Answer

When the cost ratio decreases (meaning the cost of goods sold and operating expenses decrease), there is more money left over to cover interest expenses, which causes the times interest earned ratio to increase.

Holding All Other Variables Constant, a Decrease in the Cost