When Assessing the Fixed-Payment Coverage Ratio

question 176

Multiple Choice

When assessing the fixed-payment coverage ratio,

• A) the lower its value the more risky is the firm.
• B) the lower its value, the lower is the firm's financial leverage.
• C) preferred stock dividend payments can be disregarded.
• D) the higher its value, the higher is the firm's liquidity.

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Definitions:

Tupperware

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Payments or earnings based on a percentage of the sales made by a salesperson or agent.

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The middle value in a data set when the values are arranged in ascending or descending order; if there is an even number of observations, it is the average of the two middle values.

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