Which of the following describes the interest coverage ratio?
A)Income before income taxes plus interest expense divided by interest expense
B)Income after income taxes plus interest expense divided by interest expense
C)Income after income taxes divided by interest expense
D)Income before income taxes minus interest expense divided by interest expense

Question

Quizplus · Accepted Answer

The interest coverage ratio is calculated as income before income taxes plus interest expense divided by interest expense. This measures a company's ability to make interest payments on its debt.

Which of the Following Describes the Interest Coverage Ratio