The Times Interest Earned Ratio Is Calculated by Dividing

question 38

Multiple Choice

The times interest earned ratio is calculated by dividing

• A)profit by interest expense.
• B)profit before income taxes by interest expense.
• C)profit before interest expense by interest expense.
• D)profit before interest expense and income taxes by interest expense.

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Definitions:

Economy's Expenditure

The total spending in an economy, including consumption, investment, government purchases, and net exports.

Total Income

The sum of all earnings received by an individual or entity, including wages, salaries, benefits, and other forms of compensation.

Total Expenditure

The total amount spent on goods and services over a specific period.

Circular-Flow Diagram

A visual model of the economy that shows how dollars flow through markets among households and firms.