Which of the Following Statements About the Times-Interest-Earned Ratio Is

Multiple Choice

Which of the following statements about the times-interest-earned ratio is TRUE?

A) A lower ratio indicates a higher debt paying ability.
B) Debt reduction leads to an increase in interest expense.
C) The times-interest-earned ratio is also called the interest-coverage ratio.
D) The times-interest-earned ratio is calculated by dividing gross income by interest expense.