The Times Interest Earned Ratio Is Calculated by Dividing

question 20

Multiple Choice

The times interest earned ratio is calculated by dividing

• A) net income by interest expense.
• B) income before taxes by interest expense.
• C) income before income taxes and interest expense by interest expense.
• D) net income and interest expense by interest expense.

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Definitions:

Actuarial Loss

occurs when the actual experience under a pension plan deviates from expected assumptions, resulting in higher costs than projected.

Pension Expense

The cost recognized by an employer for maintaining a defined benefit pension plan for its employees over a specific period.

Plan Assets

Assets that are held within a pension or retirement plan for the purpose of funding participant benefits.

Actuarial Loss

A loss recognized when the actual experience under a pension plan deviates from expected assumptions, resulting in increased liabilities or decreased assets.