Which of the statements below is FALSE?
A)The cash coverage ratio is EBIT plus depreciation divided by interest expense.
B)Times interest earned equals EBIT divided by interest expense.
C)The times interest earned ratio tells us the number of times a company has resorted to debt financing over the year.
D)The debt ratio basically tells us the amount in debt for every dollar of assets.

Question

Quizplus · Accepted Answer

The times interest earned ratio measures a company's ability to service its debt and is calculated by dividing EBIT by interest expense. It does not tell us the number of times a company has resorted to debt financing over the year.

Which of the Statements Below Is FALSE