A Times Interest Earned Ratio of 0

question 40

Multiple Choice

A times interest earned ratio of 0.90 to 1 means:

• A)that the firm will default on its interest payment.
• B)that net income is less than the interest expense.
• C)that the cash flow is less than the net income.
• D)that the cash flow exceeds the net income.
• E)none of the answers are correct.

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Definitions:

Unchanged Terms

Conditions or agreements that remain the same and are not altered over time or through negotiations.

Misrepresentation

An untrue assertion of reality presented by one individual to another, resulting in the latter being persuaded to enter into a contract.

Fraud

The intentional deception or misrepresentation made by a person or entity to gain an unfair advantage or to harm another party's interests.

Rectification

The process of correcting or making right an error, especially in legal documents.