Suppose we calculate a times interest earned ratio of 29 for Colgate-Palmolive. We can conclude
A) Colgate-Palmolive may experience some difficulty meeting it's interest payments.
B) Colgate-Palmolive is very unlikely to have difficulty meeting it's interest payments.
C) Colgate-Palmolive has $29 of operating cash flow for every dollar of interest expense.
D) Colgate-Palmolive's EBITDA is 29 times larger than its interest expense.

Question

Quizplus · Accepted Answer

A times interest earned ratio of 29 indicates that Colgate-Palmolive has significant operating income to cover its interest expense, making it very unlikely that they will have difficulty meeting their interest payments.

Suppose We Calculate a Times Interest Earned Ratio of 29