Which of the Following Statements Is Not True About the Times-Interest-Earned

question 40

Multiple Choice

Which of the following statements is not true about the times-interest-earned ratio?

• A)The greater the times interest earned the lower the risk of defaulting on the firm's debt.
• B)The greater the interest expense,the lower the firm's times-interest-earned ratio.
• C)The smaller the times-interest-earned the lower the financial risk of the company.
• D)A high times-interest-earned and a high debt to equity ratio means the company is effectively using financial leverage.

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