The Interest Coverage Ratio

question 13

Multiple Choice

The interest coverage ratio:

• A)Is computed by dividing total liabilities by annual interest expense.
• B)Is computed by dividing liquid assets by annual required interest payment.
• C)Indicates the percentage of total assets that are financed with borrowed money.
• D)Measures the number of times the annual interest expense could be covered by annual income from operations.

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Definitions:

Global South

denotes countries primarily situated in the Southern Hemisphere, often associated with lower economic development compared to the Global North.

Developing Countries

Nations with lower levels of industrialization, lower income per capita, and generally lower standards of living compared to more industrialized countries.

Southern Hemisphere

The half of Earth that lies south of the equator, known for having opposite seasons to the Northern Hemisphere.

World Bank

An international financial institution that provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects.