The ratio that measures the company's ability to meet required interest payments is the:
A)Debt to equity ratio.
B)Current ratio.
C)Price/earnings ratio.
D)Times interest earned ratio.

Question

Quizplus · Accepted Answer

The ratio that measures the company's ability to meet required interest payments is the times interest earned ratio. This ratio indicates how many times a company can cover its interest payments with its earnings before interest and taxes. A higher times interest earned ratio indicates that the company is more capable of meeting its interest obligations.

The Ratio That Measures the Company's Ability to Meet Required