Earnings before interest and taxes divided by the interest paid is called the:
A) Cash coverage ratio.
B) Times interest earned ratio.
C) Interval measure.
D) Debt-earnings ratio.
E) Debt-equity ratio.

Question

Quizplus · Accepted Answer

The Times Interest Earned Ratio, also known as the interest coverage ratio, measures a company's ability to make interest payments on its debt with its earnings before interest and taxes (EBIT).

Earnings Before Interest and Taxes Divided by the Interest Paid