One way analysts measure the ability of a company to meet its obligations is to calculate the times interest earned ratio for any outstanding debt the company may have. For TempoSolutions Corporation calculate the times interest earned ratio?
A) Income before interest and taxes divided by the interest expense.
B) Income before interest and taxes divided by carrying value of the bonds outstanding.
C) Income before interest and taxes divided by the face rate on bonds.
D) Face amount of bonds divided by income before interest and taxes.
Correct Answer:
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