Debtors Are Interested in the Number of Times Interest Charges

question 44

Multiple Choice

Debtors are interested in the number of times interest charges are earned because they want to

• A)know what rate of interest the corporation is paying
• B)have adequate protection against a potential drop in earnings jeopardizing their interest payments
• C)be sure their debt is backed by collateral
• D)know the tax effect of lending to a corporation

---

Definitions:

$1

A unit of currency in the United States, equivalent to 100 cents, represented both as a coin and a paper bill.

Prices of Inputs

The costs associated with purchasing the raw materials, labor, and other resources needed to produce goods or services.

Produce

To create or manufacture goods from raw materials, often associated with agricultural products and food production.

Transport

The movement of people, animals, or goods from one location to another through various modes such as road, rail, air, or sea.