Which Ratio Measures the Number of Dollars of Operating Earnings

question 49

Multiple Choice

Which ratio measures the number of dollars of operating earnings available to meet the firm's interest dollars and other fixed charges?

• A) times interest earned
• B) basic earning power
• C) fixed-charge coverage ratio
• D) ROA

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Definitions:

Business Organization

A business organization is a legal and operational structure created to conduct commercial activities, such as corporations, partnerships, and sole proprietorships.

Liabilities

Financial obligations or debts that an entity owes to others, which must be settled over time through the transfer of assets or services.

Assets

Resources owned by a business that have economic value and can be converted into cash or provide future benefits.

Borrowing Money

Acquiring funds from a lender under the condition of returning the principal sum along with agreed interest, used by individuals or organizations to finance their needs.