A Principal May Ratify an Action Taken by an Agent

question 27

True/False

A principal may ratify an action taken by an agent that the principal would not have been capable of authorizing at the time that the action was taken.

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Definitions:

Cash Coverage Ratio

The Cash Coverage Ratio measures a company's ability to cover its debt obligations with its operating cash flow, thus indicating its financial health and liquidity.

Depreciation Expense

The allocated amount of an asset's cost expensed over its useful life to represent wear and tear, obsolescence, or age.

EBIT

Earnings Before Interest and Taxes captures a business's earning power by including all costs except those related to interest and taxes.

Times Interest Earned

A metric that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.