The Interest Coverage Ratio Is a Stricter Measure of a Firm's

question 143

True/False

The interest coverage ratio is a stricter measure of a firm's ability to meet its fixed payment obligations than the fixed charge coverage ratio.

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Definitions:

Deferred Tax Asset

An accounting term used for tax overpayments or advance payments, which will get adjusted against future tax liabilities.

Tax Base

The total amount of assets or income that can be taxed by a government, determining the extent of tax revenue.

Carrying Value

The book value of an asset or liability, calculated as the original cost minus accumulated depreciation, amortization, or impairment costs.