The Earnings to Fixed Charges Ratio

question 8

Multiple Choice

The earnings to fixed charges ratio:

• A) indicates how efficiently assets are used
• B) typically includes depreciation in the denominator
• C) typically excludes extraordinary gains and losses from the numerator
• D) indicates the proportion of debt used to finance the company

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Definitions:

Stock Prices

The cost at which shares of companies are bought and sold in the stock market, reflecting the market's valuation of these companies.

Forecast Accurately

The process of predicting future events, values, or trends with a high degree of precision.

Unexpected Factors

External or unforeseen elements that can impact outcomes in various contexts, including economic conditions, natural disasters, or social changes.

Corporate Stock

Ownership shares in a corporation, representing a claim on part of the corporation's assets and earnings.