Ask Question
20 October, 14:13

A high times interest earned ratio indicates a. no protection in the event of an earnings decline. b. nothing about protection in the event of an earnings decline. c. extremely good protection in the event of an earnings decline. d. mediocre protection in the event of an earnings decline.

+5
Answers (1)
  1. 20 October, 16:52
    0
    Answer: c.

    Explanation: Interest earned ratio describes and shows the degree of solvency of a business entity.

    The higher the times interest earned ratio the better the business capacity to meet the interest on it debt obligation.

    It also means that the company is well protected and favorable to investors. This does not necessarily means that the business entity is efficiently managing it's debts repayments. It is believed that businesses with ratio <2.5 are seen to posses a higher instability.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A high times interest earned ratio indicates a. no protection in the event of an earnings decline. b. nothing about protection in the event ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers