Which of the Following Statements About the Times-Interest-Earned Ratio Is

question 71

Multiple Choice

Which of the following statements about the times-interest-earned ratio is TRUE?

• A) A lower ratio indicates a higher debt paying ability.
• B) Debt reduction leads to an increase in interest expense.
• C) The times-interest-earned ratio is also called the interest-coverage ratio.
• D) The times-interest-earned ratio is calculated by dividing gross income by interest expense.

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Definitions:

Insulator

A material or device that resists the flow of electric current, used to prevent undesired current flow.

Cooling

The process of removing heat from an object or space, often to maintain a desired temperature.

Phase Current

The electric current flowing through one phase of a multi-phase system, like in three-phase electrical systems.

Resistive Load

A type of electrical load in which the current flowing through it is directly proportional to the voltage across it, in accordance with Ohm's law.