Which of the following statistics is of more significance to a long-term creditor than to a short-term creditor?
A)Interest coverage ratio
B)Receivables turnover rate
C)Working capital
D)Quick ratio

Question

Quizplus · Accepted Answer

The interest coverage ratio measures a company's ability to cover interest expenses with operating income. This is more significant to a long-term creditor as they are more concerned about a company's ability to meet long-term debt obligations. Short-term creditors, on the other hand, are more concerned about a company's ability to meet short-term debt obligations, which is why options B, C, and D are not as significant to long-term creditors.

Which of the Following Statistics Is of More Significance to a Long-Term