Which of the Following Statements About the Times-Interest-Earned Ratio Is

question 160

Multiple Choice

Which of the following statements about the times-interest-earned ratio is true?

• A)A lower ratio indicates a higher debt paying ability.
• B)Debt reduction leads to an increase in interest expense.
• C)The times-interest-earned ratio is also called the interest-coverage ratio.
• D)The times-interest-earned ratio is calculated by dividing gross income by interest expense.

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Definitions:

Output-Related Measures

These are metrics used to evaluate the results or outputs stemming from business activities, processes, or strategies.

Dollar Sales Volume

The total monetary value of sales within a specific period, often used to measure business performance.

New Accounts

Refers to the establishment of new business relationships or accounts, often in a financial context, but can also mean gaining new clients or customers in various industries.

Behavioral Measures

Quantitative data collected about the actions and responses of individuals or groups.