A Sinking-Fund Requirement Is a Restrictive Provision Often Included in a Bond

question 55

True/False

A sinking-fund requirement is a restrictive provision often included in a bond indenture providing for periodic payments representing only interest and a large lump-sum payment at the maturity of the loan representing the entire loan principal.

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Definitions:

Common Size Income Statement

An income statement in which each line item is expressed as a percentage of sales revenue, facilitating comparison across companies or periods.

Percent of Assets

A measure or indicator expressed as a percentage of a company's total assets.

Interest Coverage Ratio

A financial metric used to determine how easily a company can pay interest on outstanding debt with its current earnings before interest and taxes.

Debt Ratio

A financial ratio that measures the proportion of a company's total debt to its total assets.