If the Times Interest Earned Ratio

question 52

Multiple Choice

If the times interest earned ratio:

• A)Increases,then risk increases.
• B)Increases,then risk decreases.
• C)Is greater than 1.5,the company is in default.
• D)Is less than 1.5,the company is carrying too little debt.
• E)Is greater than 3.0,the company is likely carrying too much debt.

---

Definitions:

Accrued Expense

Expenses that have been incurred but not yet paid, representing liabilities for goods or services received but not yet invoiced.

Recognising

The process of recording an item in the financial statements when it meets the criteria set by accounting standards.