Which of the Following Describes the Interest Coverage Ratio

question 108

Multiple Choice

Which of the following describes the interest coverage ratio?

• A) Income after income taxes plus interest expense divided by interest expense
• B) Income before income taxes plus interest expense divided by interest expense
• C) Income after income taxes divided by interest expense
• D) Income before income taxes minus interest expense divided by interest expense

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Definitions:

Projected Cash Inflows

Estimated future cash receipts resulting from business activities like sales, dividends, or loan repayments.

Capital Budgeting

The process by which a business evaluates and selects long-term investment projects.

Product Markets

Venues where goods and services are traded between producers and consumers.

Rate Of Return

A measure of the profitability of an investment, calculated as the percentage ratio of profit or loss to the initial investment cost.