The Times Interest Earned ratio measures a company's earnings before interest and taxes divided by its interest expense. The Debt Equity ratio measures the ratio of debt to equity on the company's balance sheet. For the two criteria examined, select the situation in each case that would likely result in the higher credit rating and briefly explain why. a) Times Interest Earned equals 4.3 or Times Interest Earned equals 2.7 b) The Debt/Equity ratio is 60/40 or the Debt/Equity ratio is 40/60.

The Times Interest Earned ratio measures a company's earnings before interest and taxes divided by its interest expense. The Debt Equity ratio measures the ratio of debt to equity on the company's balance sheet. For the two criteria examined, select the situation in each case that would likely result in the higher credit rating and briefly explain why. a) Times Interest Earned equals 4.3 or Times Interest Earned equals 2.7 b) The Debt/Equity ratio is 60/40 or the Debt/Equity ratio is 40/60