The lower the times interest earned ratio,the more likely:
A)a default in payment will occur.
B)a business needs to borrow money.
C)a business will suffer a loss.
D)interest payments can be made.

Question

Quizplus · Accepted Answer

The times interest earned ratio measures a company's ability to make interest payments on its debt. A lower ratio indicates that the company may not be generating enough income to cover its interest expenses, which makes it more likely that a default in payment will occur.

The Lower the Times Interest Earned Ratio,the More Likely