The Fixed Charge Coverage Ratio Recognizes That Firms Often Lease

question 90

True/False

The fixed charge coverage ratio recognizes that firms often lease equipment under contract and thus, some firms must meet more than just their scheduled interest payments out of earnings. Therefore, the fixed charge coverage is more inclusive than the TIE ratio.

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Definitions:

Forensic Accounting

Forensic accounting is the specialization in accounting that focuses on investigating financial crimes and disputes, often involving legal matters, and preparing reports that can be used in court proceedings.

Financial Documents

Papers that contain important financial information, used for analysis, decision-making, or evidence.