________ ratio indicates that a firm will be able to meet interest obligations due on outstanding debt.
A) Debt-to-equity
B) Interest turnover
C) Total assets turnover
D) Times interest earned

Question

Quizplus · Accepted Answer

The times interest earned ratio (also known as interest coverage ratio) measures a company's ability to meet its interest obligations by comparing its earnings before interest and taxes (EBIT) to the interest expenses incurred over a specific period. A higher times interest earned ratio indicates a higher ability to cover interest payments, while a lower ratio suggests a higher default risk.

________ Ratio Indicates That a Firm Will Be Able to Meet