Which of the Following Is Included in the Numerator of the Times-Interest-Earned

question 90

Multiple Choice

Which of the following is included in the numerator of the times-interest-earned ratio?

• A)Net profit
• B)Net operating profit
• C)Interest expense
• D)Gross profit

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Definitions:

Fair Value

The price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction.

Fair Value Method

An accounting approach that assesses and assigns a price to a company's assets and liabilities based on current market value.

Effective Interest Method

A method of calculating the amortized cost of a bond or loan on the basis on an effective interest rate rather than the nominal rate.