The higher the times interest earned ratio, the more likely it is that interest payments will be made.

Name: The higher the times interest earned ratio, the more likely it is that interest payments will be made.
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Question

Quizplus · Accepted Answer

The times interest earned ratio measures a company's ability to meet its interest obligations from its earnings before interest and taxes (EBIT). A higher ratio indicates greater ability to pay interest, suggesting financial stability and lower risk of default.

The Higher the Times Interest Earned Ratio, the More Likely