Questions
Single choice
Debtors are interested in the times interest earned ratio because they want to
Options
A.have adequate protection against a potential drop in earnings jeopardizing their interest payments
B.know what rate of interest the corporation is paying
C.know the tax effect of lending to a corporation
D.be sure their debt is backed by collateral
View Explanation
Verified Answer
Please login to view
Step-by-Step Analysis
Consider the purpose of the times interest earned (TIE) ratio in lending decisions.
Option 1: 'have adequate protection against a potential drop in earnings jeopardizing their interest payments' This is correct because TIE measures a company's abil......Login to view full explanationLog in for full answers
We've collected over 50,000 authentic exam questions and detailed explanations from around the globe. Log in now and get instant access to the answers!
Similar Questions
CANADIAN TIRE- Part 5 of 11 Use two decimal points. Do not add percentage (%), or times (X) with the number. Calculate Times Interest Earned in 2020
A times interest earned ratio of 7.0 indicates that the firm
Here is some financial statement information for a business. Calculate the times interest earned for the current year. Prior year Current year Cash 10,070 11,416 Accounts receivable 5,244 6,464 Accounts payable 9,505 13,479 Sales revenue 202,729 244,199 Gross profit 103,420 114,713 Interest expense 1,592 2,071 Profit before tax 63,698 68,747 Net profit 46,694 41,525 Round the answer to one decimal place.
Which ratio best measures ability to pay interest expenses?[Fill in the blank]
More Practical Tools for Students Powered by AI Study Helper
Making Your Study Simpler
Join us and instantly unlock extensive past papers & exclusive solutions to get a head start on your studies!