From a Cash flOw Position, Which One of the Following

question 387

Multiple Choice

From a cash flow position, which one of the following ratios best measures a firm's ability to pay the interest on its debts?

• A) Times interest earned ratio
• B) Cash coverage ratio
• C) Cash ratio
• D) Quick ratio
• E) Interval measure

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Definitions:

Least-Squares Regression

A statistical method used to determine the line of best fit by minimizing the sum of squares of the differences between observed values and the values predicted by the line.

Cost-Volume-Profit Analysis

A financial approach that analyzes the impact of cost and volume fluctuations on a firm's operational profit and overall earnings.

Break Even

The point at which total costs and total revenues are equal, meaning there is no profit or loss.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the ratio of fixed costs to variable costs.