Times Interest Earned Is Calculated By

question 14

Multiple Choice

Times interest earned is calculated by:

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

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Definitions:

Limited Liability Corporation

An organizational form that integrates the single-level taxation characteristic of partnerships and sole proprietorships with the protective limited liability feature of corporations.

Debt Financing

Acquiring funds for business activities by borrowing money, typically through loans or by issuing bonds, that must be repaid with interest.

Entrepreneurial Start-Up

A newly founded company with innovative business ideas aimed at addressing unmet market needs or offering new solutions.

Equity Financing

The method of raising capital by selling company shares to investors; in return, investors receive ownership interests in the company.