Which of the Following Describes the Interest Coverage Ratio

question 56

Multiple Choice

Which of the following describes the interest coverage ratio?

• A)Income before income taxes plus interest expense divided by interest expense
• B)Income after income taxes plus interest expense divided by interest expense
• C)Income after income taxes divided by interest expense
• D)Income before income taxes minus interest expense divided by interest expense

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Definitions:

Placed In Service

The point in time when an asset is ready and available for its intended use, often marking the start of depreciation or amortization for accounting purposes.

Depreciable Cost

The total cost of an asset that is subject to depreciation, including purchase price and any additional expenses to bring the asset to its intended use, minus salvage value.

Straight-Line Depreciation

An approach to apportion the value of a tangible asset across its productive years in uniform yearly sums.

Estimated Useful Life

The expected timeframe during which an asset is considered to be useful or productive for its intended purpose.