Investors Use the Times-Interest-Earned Ratio to Evaluate a Business's Ability

question 87

True/False

Investors use the times-interest-earned ratio to evaluate a business's ability to pay interest expense.

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Definitions:

Capital

Wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.

Securities

Financial instruments that represent an ownership position in a corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Shareholders' Best Interest

The principle that company management should operate in a way that enhances the value received by shareholders.

Proxy Fights

A strategy utilized by shareholders to influence a corporation's management and policies by attempting to vote in favor of their own proposals.