Which of the following ratios shows how far operating income can decline before the firm will have difficulties servicing its debt obligation?
A) fixed asset turnover
B) total asset turnover
C) debt ratio
D) times interest earned ratio

Question

Quizplus · Accepted Answer

The times interest earned ratio is a financial metric that shows how many times a company can cover its interest obligations with its operating income. This indicates the company's ability to service its debt, with a higher ratio suggesting greater ability to cover interest payments from operating income.

Which of the Following Ratios Shows How Far Operating Income