Earnings before interest and taxes divided by interest expense is the formula for which of these analytical measures?
A)Number of times interest is earned
B)Earnings per share
C)Return on investment
D)Debt to assets ratio

Question

Quizplus · Accepted Answer

The formula for number of times interest is earned (also known as interest coverage ratio) is Earnings before interest and taxes (EBIT) divided by interest expense. Therefore, option A is the correct answer. Option B refers to another formula, option C refers to return on investment (ROI) and option D refers to debt to assets ratio which have different formulas.

Earnings Before Interest and Taxes Divided by Interest Expense Is