A Solvency Measure That Focuses Specifically on the Extent to Which

question 84

Multiple Choice

A solvency measure that focuses specifically on the extent to which a company relies on outsiders for funds is:

• A) cash flow from operations to capital expenditures ratio
• B) debt service coverage ratio
• C) times interest earned ratio
• D) debt-to-equity ratio

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Definitions:

Bondholders

Investors who own bonds issued by an entity, holding a creditor stake in the entity, entitled to receive fixed interest payments and the return of principal.

Indebtedness

The condition of being obligated to repay borrowed money to lenders or creditors.

Convertible Bond

A type of bond that can be converted into a predetermined number of shares of the issuing company's stock.

Cash Payments

Transactions in which the purchaser pays for a good or service using physical currency or through immediate digital transfer of funds.