Coverage Ratios, Like Times Interest Earned and Cash Coverage Ratio

question 110

Multiple Choice

Coverage ratios, like times interest earned and cash coverage ratio, allow:

• A) a firm's management to assess how well they meet short-term liabilities.
• B) a firm's shareholders to assess how well the firm will meet its short-term liabilities.
• C) a firm's creditors to assess how well the firm will meet its interest obligations.
• D) a firm's creditors to assess how well the firm will meet its short-term liabilities other than interest expense.

---

Definitions:

Punishable

Describes an action or behavior subject to penalties or legal sanctions.

Second-degree Felony

A category of offense that is less severe than a first-degree felony but more severe than a third-degree felony, often involving significant harm or risk but with factors that mitigate the offender's culpability.

Imprisonment

The act of confining someone in a prison as a punishment for crimes they have been convicted of.

Punishable

Describing an action or offense that can be penalized by law, typically through fines, imprisonment, or other legal sanctions.