An analyst has calculated a ratio using as the numerator the sum of operating cash fl ow, interest, and taxes and as the denominator the amount of interest. What is this ratio, what does it measure, and what does it indicate? A . Th is ratio is an interest coverage ratio, measuring a company’s ability to meet its interest obligations and indicating a company’s solvency.
An analyst has calculated a ratio using as the numerator the sum of operating cash fl ow, interest, and taxes and as the denominator the amount of interest. What is this ratio, what does it measure, and what does it indicate? A . Th is ratio is an interest coverage ratio, measuring a company’s ability to meet its interest obligations and indicating a company’s solvency.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter3: Analysis Of Financial Statements
Section: Chapter Questions
Problem 5MC: Calculate the projected debt ratio, debt-to-equity ratio, liabilities-to-assets ratio,...
Related questions
Question
An analyst has calculated a ratio using as the numerator the sum of operating cash fl ow, interest, and taxes and as the denominator the amount of interest. What is this ratio, what does it measure, and what does it indicate? A . Th is ratio is an interest coverage ratio, measuring a company’s ability to meet its interest obligations and indicating a company’s solvency.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College