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

question 160

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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