One Weakness of the Times-Interest-Earned Ratio Is That It Includes

question 113

True/False

One weakness of the times-interest-earned ratio is that it includes only the annual interest expense as a finance expense that must be paid.

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Definitions:

Net Realizable Value

Net realizable value is the estimated selling price of goods, minus the estimated costs of completion and the costs necessary to make the sale.

Interim Financial Report

A financial report covering a period of less than one fiscal year that provides an update on a company's financial status.

Inventory

The raw materials, work-in-process products, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.

LIFO Method

A method of inventory valuation where the last items added to inventory are the first ones to be used or sold.