Creditors Are Interested in the Times Interest Earned Ratio Because

question 54

Multiple Choice

Creditors are interested in the times interest earned ratio because they want to

• A) know what rate of interest the corporation is paying
• B) have adequate protection against a potential drop in earnings jeopardizing their interest payments
• C) be sure their debt is backed by collateral
• D) know the tax effect of lending to a corporation

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Definitions:

Punished

The infliction or imposition of a penalty as retribution for an offense or undesirable behavior.

Moral Thought

The process of reasoning about the ethical correctness or morality of actions and principles.

Kohlberg's Theory

Refers to the psychological theory proposed by Lawrence Kohlberg about the development of moral reasoning in individuals, consisting of three levels and six stages.

Moral Behavior

Conduct that is right or good in the context of governing moral principles.