The higher the value of the times interest earned ratio,the higher is the proportion of the firm's interest income compared to its contractual interest payments.

Question

Quizplus · Accepted Answer

The times interest earned ratio measures a firm's ability to meet its interest obligations, not the proportion of interest income. A higher ratio indicates better ability to cover interest payments with earnings before interest and taxes (EBIT).

The Higher the Value of the Times Interest Earned Ratio,the