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The Times-Interest-Earned Ratio Is Calculated as EBIT Divided by Interest

question 182

True/False

The times-interest-earned ratio is calculated as EBIT divided by interest expense.


Definitions:

Original Cost

The amount initially paid for an asset, not accounting for depreciation, inflation, or market value adjustments.

Short-Term Note

A debt instrument with a maturity of less than one year, used by companies to finance short-term obligations.

Legal Fees

Charges incurred for legal services provided by attorneys or law firms.

Delinquent Taxes

Taxes that have not been paid by the due date, often incurring penalties and interest.

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