Which of the Following Ratios Measures the Extent to Which

question 40

Multiple Choice

Which of the following ratios measures the extent to which operating income can decline before the firm is unable to meet its annual interest costs?

• A)fixed charge coverage ratio
• B)debt ratio
• C)times-interest-earned ratio
• D)return on equity
• E)profit margin

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Definitions:

Price Index

A Price Index measures the average change in prices over time for a basket of goods and services, used to assess inflation or deflation in an economy.

Inventory Cost

The cost associated with acquiring, storing, and managing inventory including purchase price, warehousing, and handling costs.

Dollar-Value LIFO Retail Inventory Method

An inventory valuation method that uses the last-in, first-out (LIFO) principle combined with dollar values, adjusting for changes in the price level.