The interest coverage ratio is computed by dividing:
A)Net income by interest expense.
B)Operating income by interest expense.
C)Interest expense by net income.
D)Interest expense by operating income.

Question

Quizplus · Accepted Answer

The interest coverage ratio is a measure of a company's ability to meet its interest payments. It is calculated by dividing operating income by interest expense. This ratio shows how many times a company's operating income can cover its interest expense. A higher ratio indicates that the company is better able to meet its interest payments.

The Interest Coverage Ratio Is Computed by Dividing