A Times-Interest-Earned (TIE) Ratio That Is Less Than 1 Suggests

question 57

Multiple Choice

A times-interest-earned (TIE) ratio that is less than 1 suggests that a firm _____. 

• A)is using a low proportion of debt financing in its capital structure
• B)has a low probability of defaulting on its loans
• C)might not be able to meet its annual interest obligations on its debt
• D)is financed with equity only
• E)has an extremely low debt/assets ratio

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