What kind of information does a company's times-interest-earned ratio provide?
A)How much profit is generated by each share
B)What proportion of the company's assets are financed by debt,as opposed to equity
C)How well a company is positioned to pay interest expense on its debt
D)What proportion of the company's debts are non-current liabilities

Question

Quizplus · Accepted Answer

The times-interest-earned ratio measures a company's ability to pay interest expense on its debt by comparing its earnings before interest and taxes (EBIT) to its interest expense. A higher ratio indicates that the company is better positioned to meet its interest obligations.

What Kind of Information Does a Company's Times-Interest-Earned Ratio Provide