We use the times interest earned ratio to compare interest payments with a company's income available to pay those charges.

Question

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This is a true statement. The times interest earned ratio is a financial ratio that measures a company's ability to meet its interest payments on debt, by comparing the company's income before interest and taxes (EBIT) to its interest expenses. A higher ratio indicates that the company has more income available to cover its interest charges, which is generally seen as a positive sign of financial strength.

We Use the Times Interest Earned Ratio to Compare Interest