The ________ ratio estimates the number of times that a business could repay the current interest owed on its debt.

Question

Quizplus · Accepted Answer

The times-interest-earned ratio (also known as interest coverage ratio) measures a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses. A higher times-interest-earned ratio indicates that a company is more capable of meeting its interest payments on its debt obligations.

The ________ Ratio Estimates the Number of Times That a Business