The times interest earned ratio measures the ability of a company to meet its interest obligations with resources from its profit-making activities.

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The times interest earned ratio (also known as interest coverage ratio) calculates how many times a company can cover its interest payments with its earnings before interest and taxes (EBIT). This ratio is a measure of a company's ability to generate enough profits to pay off interest charges on its debts. Therefore, it accurately determines a company's ability to meet its interest obligations with resources from its profit-making activities.

The Times Interest Earned Ratio Measures the Ability of a Company