The Fixed Charge Coverage Ratio Recognises That Firms Often Lease

question 78

True/False

The fixed charge coverage ratio recognises that firms often lease equipment under contract and thus, some firms must meet more than just their scheduled interest payments out of earnings.Therefore, the fixed charge coverage is more inclusive than the TIE ratio.

---

Definitions:

Unconditioned Stimulus

A stimulus that naturally and automatically triggers a response without prior learning or conditioning.

Conditioned Stimulus

In classical conditioning, a previously neutral stimulus that, after becoming associated with the unconditioned stimulus, triggers a conditioned response.

Neutral Stimulus

A stimulus that initially produces no specific response other than focusing attention, until it is paired with an unconditioned stimulus.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with the unconditioned stimulus, eventually comes to trigger a conditioned response.