The Times Interest Earned Ratio for Bodhaine's Orchard Was 8

question 211

Multiple Choice

The times interest earned ratio for Bodhaine's Orchard was 8.52 in 2014,6.63 in 2015,and 2.74 in 2016.What is the most likely interpretation of this ratio?

• A) The ability to cover interest costs with resources from operations is decreasing.
• B) The amount of debt has been decreasing each year.
• C) Current liabilities are growing faster than current assets.
• D) Income taxes have reduced an increasing amount of operating income.

---

Definitions:

Accounting Period

The time frame in which financial transactions are recorded and reported, typically a fiscal year or quarter.

Maturity Value

The total amount that will be paid to an investor at the end of a debt instrument's term, including the principal and any accrued interest.

Income Statement

A financial report that shows a company's financial performance over a specific period, detailing revenues, expenses, and net income.

Interpret

To explain or provide the meaning of something, often involving analysis of data or information to derive understanding or conclusions.