Asked by Melissa Brown on May 02, 2024
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The ratio of EBIT to interest expenses is known as the:
A) quick-ratio.
B) debt-to-assets ratio.
C) debt-to-equity ratio.
D) times interest earned.
E) None of the above
Times Interest Earned
A financial ratio that measures a company's ability to meet its interest obligations, calculated as earnings before interest and taxes divided by interest expense.
Debt-to-Assets Ratio
Debt-to-Assets Ratio is a financial ratio indicating the proportion of a company's assets that are financed through debt, used as a measure of financial leverage.
Quick-Ratio
A measure of a company's ability to meet its short-term obligations with its most liquid assets, calculated as (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities.
- Recognize the value of financial ratios in examining a firm's efficiency and economic health.
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Learning Objectives
- Recognize the value of financial ratios in examining a firm's efficiency and economic health.
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