A High Interest-Coverage Ratio Indicates a Company's Difficulty in Paying

question 95

True/False

A high interest-coverage ratio indicates a company's difficulty in paying interest expense.

---

Definitions:

Buying Division

A department within a company responsible for purchasing goods, materials, and services required for the business operations.

Negotiated Transfer Price

A transfer price agreed upon by the selling and buying divisions within the same company.

External Market Price

The price at which goods or services are bought and sold outside of a company, determined by the supply and demand in the wider market.

Savings

The portion of income not spent on current expenditures or taxes, often set aside for future use or investment.