If a Firm Has Both a Fixed Interest Expense and Fixed

question 48

Multiple Choice

If a firm has both a fixed interest expense and fixed lease payments,

• A) times interest earned ratio will be smaller than fixed charge coverage ratio.
• B) times interest earned ratio will be greater than fixed charge coverage ratio.
• C) times interest earned ratio will be the same as fixed charge coverage ratio.
• D) fixed charge coverage ratio cannot be computed.

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Definitions:

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Being limited in movement, action, or activity, often by laws, rules, or circumstances.

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An ethical framework that emphasizes the role of character and virtue in moral philosophy rather than either doing one’s duty or acting to bring about good consequences.

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Direct, clear instructions or information about how to behave or what to do.

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A specific situation or set of conditions that distinguishes it from others; often requires tailored considerations or actions.