Company A has a times-interest-earned ratio of 5.9, and company B has a times-interest-earned ratio of 6.4. A is a competitor of B. What conclusions would the chief financial officer of A arrive at looking at these numbers and his competitor's?
A) A times-interest-earned ratio of 5.9 is better than a times-interest-earned ratio of 6.4.
B) The times-interest-earned ratio is of no interest to lenders because the ratios are so close together.
C) Company B is in a better position to pay interest than company A.
D) Company A is in a better position to pay interest than it was last year.
Correct Answer:
Verified
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A)
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