The higher,the value of the ________ ratio,the better able a firm is to fulfill its interest obligations.

Question

Quizplus · Accepted Answer

The times interest earned (TIE) ratio measures the ability of a company to meet its interest payments. A higher TIE ratio indicates that the company is generating enough operating income to cover its interest expenses, which means it is less likely to default on its debt obligations. Therefore, the higher the TIE ratio, the better able a firm is to fulfill its interest obligations.

The Higher,the Value of the ________ Ratio,the Better Able a Firm