The Ratio That Measures the Number of Times That Operating

question 23

Multiple Choice

The ratio that measures the number of times that operating income can cover interest expense is the:

• A)debt ratio.
• B)leverage.
• C)times-interest-earned ratio.
• D)rate of return on total assets.

---

Definitions:

Residual Income

The income that remains after deducting all required costs of capital and operating expenses from net income.

Margin

A financial metric that measures the amount by which revenue from sales exceeds costs in a business, usually presented as a percentage of revenue.

Maintenance Department

A division within a company responsible for maintaining equipment, facilities, and systems in working order.

Operating Divisions

Distinct areas within a company that are responsible for different operations, products, or markets, often treated as separate business units.