Suppose We Calculate a Times Interest Earned Ratio of 29

question 7

Multiple Choice

Suppose we calculate a times interest earned ratio of 29 for Colgate-Palmolive.We can conclude that

• A)Colgate-Palmolive may experience some difficulty meeting its interest payments.
• B)Colgate-Palmolive is very unlikely to have difficulty meeting its interest payments.
• C)Colgate-Palmolive has $29 of operating cash flow for every dollar of interest expense.
• D)Colgate-Palmolive's EBITDA is 29 times larger than its interest expense.

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Definitions:

Inventory Storage

The process and facilities used to keep goods stocked and maintained until they are sold or distributed.

Equivalent Units

A concept in cost accounting that converts partially completed units of production into a number of fully completed units for inventory valuation.

Units Transferred Out

Refers to the number of units moved from one production process to the next or finished goods completed during a period.

Ending Work

The final stage or tasks involved in completing a project or process, or the concluding balances in financial accounts at the end of a period.