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Which is not true about the times-interest-earned ratio

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Problem 1: Which of the following statements is not true about the times-interest-earned ratio?

Option 1: The greater the times interest earned the lower the risk of defaulting on the firm's debt.

Option 2: The smaller the times-interest-earned the lower the financial risk of the company.

Option 3: The greater the interest expense, the lower the firm's times-interest-earned ratio.

Option 4: A high times-interest-earned and a high debt to equity ratio means the company is effectively using financial leverage.

Reference no: EM132705983

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