The times interest earned ratio indicates how many times the company's interest expense was covered by its
A)sales revenue.
B)operating results.
C)financing results.
D)investing results.

Question

Quizplus · Accepted Answer

The times interest earned ratio is a measure of a company's ability to meet its interest obligations. It is calculated by dividing the company's earnings before interest and taxes (EBIT) by its interest expense. Therefore, the ratio indicates how many times the company's interest expense was covered by its operating results (EBIT).

The Times Interest Earned Ratio Indicates How Many Times the Company's