Final answer:
The correct answer is option c. The accurate statement regarding a company's ability to meet its long-term debt obligations is the times interest earned ratio indicates if a company can make its principal and interest payments.
Step-by-step explanation:
The accurate statement regarding a company's ability to meet its long-term debt obligations is C). The times interest earned ratio indicates if a company can make its principal and interest payments.
The times interest earned ratio, also known as the interest coverage ratio, measures a company's ability to pay its interest expenses with its operating earnings. It is calculated by dividing the company's earnings before interest and taxes (EBIT) by the interest expense. A higher ratio indicates that the company has a larger margin of safety to meet its interest obligations.
Other key ratios used to measure a company's long-term solvency include the debt-to-equity ratio and return on assets. The debt-to-equity ratio compares a company's total debt to its shareholders' equity and indicates the proportion of financing provided by debt. A higher ratio may suggest that the company has used up its borrowing capacity and may have difficulty meeting its debt obligations. Return on assets measures a company's profitability by expressing its net income as a percentage of its total assets. A higher ratio indicates that the company is generating more earnings per dollar of assets.