The Debt Coverage Ratio Is Used by Lenders to Indicate

question 14

True/False

The debt coverage ratio is used by lenders to indicate the riskiness of a loan.

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Definitions:

Equity Method

An accounting principle used for incorporating the investor's share of associates' profits or losses, contributing to the investor's book value of the investment.

Shareholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing the owners' claim on the business.

Cash Consideration

The amount of cash that is paid or received during transactions, such as acquisitions or sales of assets.

Outstanding Shares

The total number of shares of a corporation that have been issued and are held by shareholders, excluding treasury shares.