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:

World System Theory

A multidisciplinary, macro-scale approach to world history and social change that suggests there is a world economic system in which some countries benefit while others are exploited.

Peripheral Country

A term used in world-systems theory to describe countries that are less developed economically and are often exploited by more developed core countries through trade and labor.

Core Country

Nations that are economically developed with a high standard of living and significant influence on global economic and political decisions.

Enbridge Pipeline

A comprehensive network of pipelines operated by Enbridge, Inc., used to transport crude oil and natural gas across North America.