Times-interest-earned ratio: Times-interest earned ratio also known as interest coverage ratio is a financial ratio which is indicates the company’s ability to pay its interest expenses. It is measured by dividing the Profit before Interest and Taxes divided by the interest expenses. The higher the times interest earned ratio, higher is the likelihood of company paying its interest expenses. To determine: The calculation of times-interest-earned ratio and what does it evaluate.

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Chapter 11, Problem 15RQ

To determine

Times-interest-earned ratio:

Times-interest earned ratio also known as interest coverage ratio is a financial ratio which is indicates the company’s ability to pay its interest expenses. It is measured by dividing the Profit before Interest and Taxes divided by the interest expenses. The higher the times interest earned ratio, higher is the likelihood of company paying its interest expenses.

To determine:

The calculation of times-interest-earned ratio and what does it evaluate.

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