The Times-Interest-Earned Ratio Is Calculated by Which of the Following

question 145

Multiple Choice

The times-interest-earned ratio is calculated by which of the following?

• A)Total assets divided by interest expense.
• B)Net income divided by interest expense.
• C)Earnings before interest and taxes divided by interest expense.
• D)None of these answer choices is correct.

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Definitions:

Total Costs

The aggregate amount of all expenses incurred in the production of goods or services, including fixed and variable costs.

Linear

A mathematical relationship or function that can be graphically represented by a straight line, characterized by consistent changes.

Flexible Budget

A flexible budget designed to adapt in line with changes in the amount of activity or volume.

Variable Manufacturing

Costs that vary directly with the level of production, such as raw materials and direct labor costs, as opposed to fixed manufacturing costs.