From a Cash Flow Position,which One of the Following Ratios

question 7

Multiple Choice

From a cash flow position,which one of the following ratios best measures a firm's ability to pay the interest on its debts?

• A) times interest earned ratio
• B) cash coverage ratio
• C) cash ratio
• D) quick ratio
• E) Interval measure

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Definitions:

Interest

Interest is the charge for borrowing money, typically expressed as an annual percentage rate of the principal.

Compounded Monthly

The method of accruing interest on the initial amount of a loan or deposit, thereby earning interest on the accrued interest, on a monthly basis.

12%

A numerical value representing twelve parts per hundred, often used to denote a percentage rate, such as an interest rate or growth rate.

7 Years

A time period of seven years, often used in the context of loans, investments, or tenure.