The Higher the Value of the Times Interest Earned Ratio

question 136

True/False

The higher the value of the times interest earned ratio, the higher the proportion of the firm's interest income compared to its contractual interest payments.

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Definitions:

Net Income

The final profit figure for a company, calculated by subtracting all expenditures and taxes from revenues.

Total Liabilities

The combined debts and obligations that a company owes to outside parties at any given time.

Accrued Expenses

Expenses that have been incurred but not yet paid for, often recognized in accounting through an adjusting entry.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the consumption of the asset's value over time.