The Financial Ratio,defined as Earnings Before Interest and Taxes Divided

question 20

Multiple Choice

The financial ratio,defined as earnings before interest and taxes divided by
Interest paid,is called the:

• A)times interest earned ratio
• B)debt-equity ratio
• C)profit margin
• D)return on equity
• E)cash coverage ratio

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Definitions:

Stare Decisis

“Standing by the decision” a principle stating that rulings made in higher courts are binding precedent for lower courts.

Watered Stock

Stock that is issued to individuals below its fair market value.

Fair Market Value

The price a willing buyer would pay a willing seller in a transaction where both parties have reasonable knowledge of the relevant facts and neither is under compulsion to act.

No-Par Stock

Shares issued without a nominal or face value, where the value is determined by the price investors are willing to pay.