The Times-Interest-Earned Ratio Is Calculated by Dividing Operating Income by Operating

question 74

True/False

The times-interest-earned ratio is calculated by dividing operating income by operating expenses.

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Definitions:

Simple Interest

A method of calculating interest where the interest charge is computed only on the principal amount and not on the interest that has accumulated.

Savings Account

A bank account where money is deposited for safekeeping, which earns interest over time.

Simple Interest

Interest calculated on the principal portion of a loan or deposit without compounding.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable, and inventories, and meeting other short-term liabilities.