The Lower the Times Interest Earned Ratio, the More Likely

question 22

Multiple Choice

The lower the times interest earned ratio, the more likely:

• A) a default in payment will occur.
• B) a business needs to borrow money.
• C) a business will suffer a loss.
• D) interest payments can be made.
• E) a business can pay its debt.

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Definitions:

Outcome

The result or consequence of an experiment, action, or occurrence.

Prior Probabilities

Initial estimates of the probabilities of events.

Probabilities

The assessment of the probability that a particular event will take place.

Combinations

A method of counting that determines the number of possible arrangements in a collection without regard to the order of the elements.