If the Times Interest Earned Ratio

question 52

Multiple Choice

If the times interest earned ratio:

• A)Increases,then risk increases.
• B)Increases,then risk decreases.
• C)Is greater than 1.5,the company is in default.
• D)Is less than 1.5,the company is carrying too little debt.
• E)Is greater than 3.0,the company is likely carrying too much debt.

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Definitions:

Promissory Estoppel

A legal principle that prevents a party from backing out of a promise which led the other party to take action or abstain from it, based on the promise.

Illusory Promise

A statement that appears to be a promise but does not actually bind the party making it to any action or performance, rendering it unenforceable as a contract.

Release

A legal document or agreement resulting in one party forfeiting the right to make claims against another party in exchange for a settlement or relief.

Unforeseeably Difficult

Situations or tasks that could not have been predicted to be as challenging or complex as they are found to be.