The Primary Difference Between the Debt to Equity Ratio and the Times

Multiple Choice

The primary difference between the debt to equity ratio and the times interest earned ratio is:

A) The debt to equity ratio uses elements from the balance sheet; the times interest earned ratio uses elements from the income statement.
B) The debt to equity ratio is a long-term solvency measure; the times interest earned ratio is a short term solvency ratio.
C) The debt to equity ratio is a long-term solvency measure; the times interest earned ratio is a performance ratio.
D) The debt to equity ratio can be compared to industry averages; the times interest earned ratio varies too widely from firm to firm to permit comparisons to the industry.