One Way Analysts Measure the Ability of a Company to Meet

question 4

Short Answer

One way analysts measure the ability of a company to meet its obligations is to calculate the times interest earned ratio for any outstanding debt the company may have. How would a company with $100,000 of outstanding bonds paying 8.5% annually and income before interest and taxes of $50,000, calculate the interest coverage (accrual basis) ratio?
a.Income before interest and taxes divided by the interest expense.
b.Income before interest and taxes divided by carrying value of the bonds outstanding.
c.Income before interest and taxes divided by the face value on bonds.
d.Face value of the bonds divided by income before interest and taxes.

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Definitions:

Minority Staff

Refers to employees within an organization belonging to a racial, ethnic, cultural, or possibly gender group that is viewed as different from the majority group.

Holding Environment

A supportive space that provides containment and safety, allowing individuals or groups to explore and deal with thoughts, emotions, and experiences.

Workplace Environment

The physical and psychological conditions under which employees work, including factors such as culture, safety, and resources.

Demanding Problems

Issues or situations that are challenging and require significant time, effort, or resources to resolve.