If the Cash Coverage Ratio Exceeds the Times Interest Earned

question 51

Multiple Choice

If the cash coverage ratio exceeds the times interest earned ratio,then the firm has:

• A) a positive cash flow.
• B) depreciable assets.
• C) no long-term debt.
• D) short-term debts.

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Definitions:

Dividends in Arrears

Dividends on cumulative preferred stock that have not been paid in prior years.

Cumulative

Describes items or amounts that increase over time through successive additions, often used in the context of dividends that are accrued if not paid in a given period.

Preferred Stockholders

Investors who own preferred shares in a company, which have a higher claim on assets and earnings than common stock, often receiving dividends before common stockholders.

Common Stockholders

Individuals or entities that own common stock in a corporation, granting them rights to dividends and voting in corporate matters.