A Times-Interest-Earned (TIE) Ratio of Less Than 1 Indicates _____

question 25

Multiple Choice

A times-interest-earned (TIE) ratio of less than 1 indicates _____.

• A) a less debt in the capital structure of the firm
• B) a low probability that the firm will default
• C) the firm's inability to meet its annual interest obligations
• D) that the firm is financed only by equity
• E) that the debt/assets ratio of the firm is very low

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Definitions:

Thought

The act or process of thinking, where ideas, memories, and considerations are processed cognitively.

Gricean Maxim

Principles proposed by philosopher H.P. Grice to ensure clear, cooperative communication, including quality, quantity, relation, and manner.

Quantity

Quantity refers to an amount or number of a material or immaterial thing not requiring a unit of measure.