The Times Interest Earned Ratio Is Calculated as

question 15

Multiple Choice

The times interest earned ratio is calculated as

• A)Interest expense/Net income.
• B)Net income/Interest expense.
• C)(Net income + interest expense + tax expense)/Interest expense.

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Definitions:

Effective

Producing the intended or desired result.

Dishonors

Refers to the failure to fulfill an obligation, especially the failure of a bank to pay a check or note when presented.

Sufficient Funds

The necessary amount of money available to complete a transaction or meet financial obligations.

Liable

Being legally responsible or obligated to make amends for harm caused to another person or property.