Final answer:
The lowest times interest earned ratio among three companies in the same industry would indicate which company has the highest financial risk because it shows the company has less earnings to cover its interest expenses.
Step-by-step explanation:
The times interest earned ratio, or the interest coverage ratio, is a measure of a company's ability to honor its debt obligations. It calculates how many times a company can cover its interest charges on a pre-tax basis. A high times interest earned ratio suggests that the company has more than adequate earnings to cover its interest expenses, whereas a lower ratio indicates higher financial risk.
Assuming three companies in the same industry have the provided times interest earned ratios but without specifying the actual figures, the company with the lowest ratio would appear to have the highest financial risk. This is because they would have less earnings relative to their interest expense, suggesting a tighter financial position and possibly difficulty in meeting debt obligations during downturns or tight cash flow periods.
Without information on the actual ratios, it's impossible to say which of the three companies has the highest financial risk. However, investors typically compare these ratios to industry averages or direct competitors to gauge a company’s relative financial health and risk levels.