Times Interest Earned Is Calculated By

question 71

Multiple Choice

Times interest earned is calculated by:

• A)Multiplying interest expense by income.
• B)Dividing interest expense by income before interest expense.
• C)Dividing income before interest expense and income taxes by interest expense.
• D)Multiplying interest expense by income before interest expense.
• E)Dividing income before interest expense by interest expense and income taxes.

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Definitions:

Dollar Sales

The total revenue a company generates expressed in monetary terms, without taking into account the cost of goods sold.

Contribution Margin Ratio

A financial metric used to analyze the profitability of a product, calculated as (Sales - Variable Costs) / Sales.

Target Profit

Pre-determined earnings a company aims to achieve within a specific period.

Units Sold

The total number of product units that have been sold during a specific period.