An Item Must Be Outside the Ordinary Operations of the Business

question 28

True/False

An item must be outside the ordinary operations of the business or be of a non-recurring nature to be classified as an extraordinary item under IAS 1.

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Definitions:

Cash Coverage Ratio

A financial metric that measures a company's ability to cover its interest obligations with its cash flow.

Depreciation Expense

Segmenting the financial outlay of a physical asset across its period of service.

EBIT

A financial performance indicator, earnings before interest and taxes, which omits the costs related to interest and income taxes.

Times Interest Earned

A financial metric that compares a company's income before interest and taxes to its interest expenses, indicating ability to meet interest obligations.