The Times-Interest-Earned Ratio Tells How Many Times the Company's Earnings

question 73

True/False

The times-interest-earned ratio tells how many times the company's earnings cover the interest payments on the debt it is carrying.

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Definitions:

Machine Hours

A measure of the total time that production equipment is operational, used to allocate machine-related expenses to products.

Cost Behaviour

The characteristic of costs that they either remain stable or change in response to variations in business activity levels.

Sales in Units

The total number of individual items sold by a company, as distinguished from sales measured in currency.

Indirect Costs

Expenses that are not directly traceable to a specific product or process, such as utilities or administrative salaries.