From a Cash Flow Position,which One of the Following Ratios

question 31

Multiple Choice

From a cash flow position,which one of the following ratios best measures a firm's ability to pay the interest on its debts?

• A)Times interest earned ratio
• B)Cash coverage ratio
• C)Cash ratio
• D)Quick ratio
• E)Interval measure

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Definitions:

Variable Cost Per Unit

A cost that changes with the level of output or sales, directly proportional to the amount of goods or services produced.

Earnings Before Interest And Taxes

Also known as EBIT, it measures a company's profitability before deducting interest and income tax expenses.

Depreciation Expense

Spreading out the price of a tangible asset over the period it can be used.

Variable Cost

The costs that vary directly with the level of production or with the volume of services provided.