The Times Interest Earned Ratio Is Calculated by Dividing Income

question 81

True/False

The times interest earned ratio is calculated by dividing income before interest expense and income taxes by interest expense.

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Definitions:

Profitability

An indicator of how effectively a company generates profit from its revenues, often measured by profit margins or return on investment.

Cost

The value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore.

Composite Units

A measurement or costing method that combines different elements or articles to determine a standard unit rate or cost.

Sales Mix

The proportion of different products or services that a company sells, reflecting the variety and quantities sold.