Which of the Following Describes the Interest Coverage Ratio

question 56

Multiple Choice

Which of the following describes the interest coverage ratio?

• A)Income before income taxes plus interest expense divided by interest expense
• B)Income after income taxes plus interest expense divided by interest expense
• C)Income after income taxes divided by interest expense
• D)Income before income taxes minus interest expense divided by interest expense

---

Definitions:

Budget Line

A graphical representation that shows all possible combinations of two goods that can be purchased with a given income and prices.

Commodity 1

A generic term for a raw material or primary agricultural product that can be bought and sold, such as copper or coffee.

Commodity 2

Typically refers to a basic good used in commerce that is interchangeable with other goods of the same type.

Budget Line

A graphical representation of all possible combinations of two goods that a consumer can afford given their income and the prices of the goods.