contestada

Times interest earned is calculated by:

a. Dividing income before interest expense by interest expense and income taxes.
b. Multiplying interest expense by income before interest expense.
c. Dividing income before interest expense and income taxes by interest expense.
d. Multiplying interest expense by income.
e. Dividing interest expense by income before depreciation and interest expense.

Respuesta :

hamzatauseef

Answer:

C)  Dividing income before interest expense and income taxes by interest expense.

Explanation:

Times interest earned is the interest coverage ratio. This explains how many times a company is able to cover its interest expense as relative to its income.

This is calculated by Dividing income before interest expense and income taxes by the interest incomes. This basically conveys signals about the performance of the company and its solvency by finding a performance measure of how many times a company can pay off its debt obligations.

A higher interest times earned metric means a healthier firm.

Hope that helps.

Otras preguntas