Times Interest Earned Is Calculated By

question 71

Multiple Choice

Times interest earned is calculated by:

• A)Multiplying interest expense by income.
• B)Dividing interest expense by income before interest expense.
• C)Dividing income before interest expense and income taxes by interest expense.
• D)Multiplying interest expense by income before interest expense.
• E)Dividing income before interest expense by interest expense and income taxes.

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Definitions:

Functional Currency

The money used in the main financial setting where a business functions and produces cash movements.

Relative Value

An assessment of an asset's worth when compared to the price of other similar assets or benchmarks, often used to identify undervalued or overvalued investments.

Functional Currency

The primary currency used by a business or entity in its financial statements, reflecting the economic environment in which it primarily operates.

Consolidated Balance Sheet

A financial statement presenting the total assets, liabilities, and shareholders' equity of a parent company and its subsidiaries as one entity.