The ________ ratio is a measure of a company's ability to make the interest payments on its debt.
A)debt-to-net worth
B)times-interest-earned
C)net sales-to-working capital
D)net profit-to-equity

Question

Quizplus · Accepted Answer

The times-interest-earned ratio measures a company's ability to make interest payments on its debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses. A higher ratio indicates that the company is more capable of meeting its interest obligations.

The ________ Ratio Is a Measure of a Company's Ability