The Fixed-Charge Coverage Ratio Includes All of the Following in the Denominator

question 41

Multiple Choice

The fixed-charge coverage ratio includes all of the following in the denominator EXCEPT ____ .

• A) lease payments
• B) preferred dividends before tax
• C) Before-tax sinking fund
• D) common stock dividends

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Definitions:

Goodwill

An intangible asset representing the value of a company's brand, customer relations, employee morale, and other factors not directly measurable but that contribute to earnings.

Purchase Price

The amount of money paid to acquire a product or service.

Net Value

The actual worth or value of an entity after subtracting liabilities from its assets, often reflecting the financial health and stability of a business or investment.

Tangible Assets

Physical assets that have a defined monetary value and can be touched or seen, such as machinery, buildings, and vehicles.