Halverson's Times Interest Earned Ratio Was 2

question 13

Multiple Choice

Halverson's times interest earned ratio was 2.98 in 2010,2.79 in 2009,and 2.31 in 2008.Which of the following statements about their ratio is possibly correct?

• A)Their increasing ratio indicates decreasing levels of debt on which interest is incurred.
• B)Their increasing ratio indicates their strategy of pursuing growth by investment in other companies which has increased debt but their profits have not yet increased from those investments.
• C)The increasing ratio implies increased long-term debt financing.
• D)Their increasing ratio would be considered by creditors to be an indicator of higher risk.

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Definitions:

Mineral Rights

The legal rights to explore for and produce the minerals underneath a piece of land.

Easement

A right granted to a person or entity to use the land of another for a specific purpose, such as access to another property.

Reservation

An arrangement to secure a place or service in advance, such as a hotel room or a seat on a flight.

Prescription

A direction, usually written, by a qualified health-care professional for the preparation and use of a medicine or remedy.