A times interest earned ratio of 11 means that the company's:
A)net income is large enough to pay interest and taxes 11 times.
B)net cash flow from operations before taxes and interest is large enough to pay interest and taxes 11 times.
C)net cash flow from operations is large enough to pay interest and taxes 11 times.
D)income before taxes and interest is large enough to pay interest 11 times.

Question

Quizplus · Accepted Answer

Times interest earned = (Net income + Interest expense + Income tax expense)÷ Interest Expense
This ratio indicates how many times the company's interest expense was covered by its operating income.Or,in other words,the company's net income before interest expense and income tax expense is 11 times greater than its interest expense.

A Times Interest Earned Ratio of 11 Means That the Company's