In 2014, C Co

question 22

Multiple Choice

In 2014, C Co. reported a times interest earned ratio of 12.33 times while P Co. reported a ratio of 11.07 times. Which of the following statements is false?

• A) C Co. is more liquid than P. Co.
• B) Lenders would be pleased with the ratios of both companies and be willing to lend them money for future expansion.
• C) P Co. and C Co. have more than adequate ratios demonstrating their ability to cover interest charges with their earnings levels.
• D) C Co's ratio is about 11.3% higher than P Co's ratio.

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Definitions:

Sedimentary

Relating to rocks formed by the accumulation and consolidation of mineral and organic particles deposited by water, ice, or air.

Lignite

A soft brownish coal showing traces of plant structure, intermediate between bituminous coal and peat.

Sulfuric Acid

A highly corrosive strong mineral acid with molecular formula H2SO4, widely used in industry.

Runoff

Water from rain, snowmelt, or other sources that flows over the land surface and is not absorbed into the ground, potentially carrying pollutants to bodies of water.