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Why is the times interest earned ratio based on earnings before interest expense and income taxes? Multiple choice question. Earnings before interest expense and income
Why is the times interest earned ratio based on earnings before interest expense and income taxes?
Multiple choice question.
Earnings before interest expense and income taxes are the amount available for making interest payments.
Income tax expense is unknown at the time the income statement is prepared.
Interest expense and income taxes are not actual expenses of business operations.
The amount of interest expense is variable and changes as payments are made or money is borrowed.
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