Multiple Choice
Which of the following statements concerning a firm's times-interest earned (TIE) ratio is correct?
A) Generally the lower its TIE ratio, the higher the probability that the firm will default on its debt.
B) The TIE ratio is calculated by dividing net income by interest charges.
C) The TIE ratio increases if the debt/assets ratio increases, and vice versa.
D) The TIE ratio is always greater than 1.
E) The TIE ratio shows the effects of both operating leverage and financial leverage.
Correct Answer:
Verified
Correct Answer:
Verified
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