Asked by Ashley Sanchez on Jun 20, 2024
Verified
Which of the accounting ratios considers the importance of cash flows relating to required interest payments?
A) Times interest earned.
B) Debt-to-equity.
C) Cash coverage.
D) Quick.
Cash Coverage
A ratio that measures a company's ability to meet its interest obligations with its operating cash flow, providing insight into financial stability.
- Acquire the ability to calculate and interpret the times interest earned ratio, understanding its role in financial health analysis.
Verified Answer
RB
Ronil BonnetJun 22, 2024
Final Answer :
C
Explanation :
The cash coverage ratio is used to determine a company's ability to pay its debts, specifically in terms of interest payments. The ratio considers the importance of cash flows relating to required interest payments.
Learning Objectives
- Acquire the ability to calculate and interpret the times interest earned ratio, understanding its role in financial health analysis.