One Weakness of the Times Interest Earned Ratio Is That

question 65

True/False

One weakness of the times interest earned ratio is that it includes only the annual interest expense as a finance expense and ignores other financing items such as lease payments that must be paid.

---

Definitions:

Federal Income Tax

A tax levied by the U.S. federal government on an individual's or entity's annual income.

Marginal Tax Rate

The rate at which an additional dollar of income would be taxed, representing the tax rate applicable to the highest dollar of an individual's income.

Personal Income Tax

A tax that individuals pay on their income to the government, often levied at progressive rates where the tax rate increases as income increases.

Income

The money received by an individual or business in exchange for providing a good or service or through investing capital.