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The Brealy&Myers "times interest earned" ratio is (earnings before interest
and taxes + depreciation + interest)/interest. B&M say this ratio is a
"measure of financial leverage ... The regular interest payment is a hurdle
that companies must keep jumping if they are to avoid default. The times
interest earned ratio measures how much clear air there is between hurdle
and hurdler. However, always bear in mind that such summary measures tell
only a part of the story. For example, it would make sense to include other
fixed charges such as regular repayments of existing debt or long-term lease
payments."