Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Which of the following statements concerning a firm's times-interest earned (TIE) ratio is correct? Generally the lower its TIE ratio, the higher the probability that
Which of the following statements concerning a firm's times-interest earned (TIE) ratio is correct?
Generally the lower its TIE ratio, the higher the probability that the firm will default on its debt.
The TIE ratio is calculated by dividing net income by interest charges.
The TIE ratio increases if the debt/assets ratio increases, and vice versa.
The TIE ratio is always greater than 1.
The TIE ratio shows the effects of both operating leverage and financial leverage.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started