Suppose we calculate a times interest earned ratio of 29 for Colgate-Palmolive.We can conclude that
A)Colgate-Palmolive may experience some difficulty meeting its interest payments.
B)Colgate-Palmolive is very unlikely to have difficulty meeting its 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 expenses, making it very unlikely to have difficulty meeting its interest payments.

Suppose We Calculate a Times Interest Earned Ratio of 29