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Question
Which of the following statements is true about the relationship between the debt/assets ratio and the times-interest-earned ratio (TIE) of a firm? Consider everything else equal.
a. If the debt/assets ratio increases, the TIE ratio will also increase.
b. If the debt/assets ratio decreases, the TIE ratio will increase.
c. If the debt/assets ratio decreases, the TIE ratio will also decrease.
d. The debt/assets ratio will always be equal to the TIE ratio.
e. The debt/assets ratio and the TIE ratio are not related to each other.
Answer
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