What Does a Coverage Ratio Measure

question 21

Multiple Choice

What does a coverage ratio measure?

• A)The company's ability to pay the interest on its debt
• B)The company's ability to pay the principal amount of its debt
• C)The company's ability to "cover" (pay)its operating expenses
• D)The company's ability to "cover" (meet)shareholder return expectations

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Definitions:

Total Market

The total market refers to the entire demand for a specific good or service within a given geographic area or industry.

Market Price

The current price at which an asset or service can be bought or sold in the marketplace.

Deadweight Loss

A dip in economic optimization that happens when the equilibrium of a good or service in the free market is not realized.

Price-Discriminates

The practice of selling the same product to different buyers at different prices based on their willingness to pay, not differences in production costs.