Calculate the ________ to assess a company's ability to cover its interest payments,as compared to its peers.

Question

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The times interest earned ratio (also known as interest coverage ratio) is used to measure a company's ability to meet its interest payments with its operating income. It is calculated by dividing the company's earnings before interest and taxes (EBIT) by its interest expenses. Comparing this ratio to that of its peers helps to assess the company's financial health in relation to industry standards. The other options (debt ratio, current ratio, and asset ratio) do not directly measure a company's ability to cover interest payments.

Calculate the ________ to Assess a Company's Ability to Cover