Times interest earned is calculated by:
A) Dividing income before interest expense and income taxes by interest expense.
B) Dividing interest expense by income before interest expense.
C) Multiplying interest expense by income.
D) Dividing income before interest expense by interest expense and income taxes.
E) Multiplying interest expense by income before interest expense.

Question

Quizplus · Accepted Answer

Times interest earned is calculated by dividing income before interest expense and income taxes by interest expense. This is used to determine a company's ability to pay interest expenses on outstanding debt.

Times Interest Earned Is Calculated By