Interest Coverage Ratio Is a Measure of

question 169

Multiple Choice

Interest coverage ratio is a measure of

• A)financial leverage.
• B)income after taxes and interest divided by interest expense.
• C)stockholders' control.
• D)protection from default on interest.

---

Definitions:

Direct Write-off Method

A method of accounting for bad debts that involves charging unpaid invoices directly to the expense account when they are determined to be uncollectible.

Allowance Method

An accounting technique used to estimate uncollectible accounts receivable and record them as an expense.

Bad Debts

Money owed to a company that is considered irrecoverable and is written off as a loss.

Outstanding Balances

The total amount of money owed that has not yet been paid.