Question

What is one difference between the current ratio and the times interest earned ratio??

Answer 1

The times interest earned ratio is an indicator of company's ability to meet the interest payments on its debt.

The current ratio is a liquidity ratio that calculates a company's ability to pay short-term and long-term obligations.

Answer 2

By definition, a current ratio is a quantity that measures a company's capability to settle its obligations, either it could be a short-term or a long-term. On the other hand, an interest earned ratio is a quantity that measures the company's capability to settle its debt balances.