If a firm has both interest expense and lease payments,
A)times interest earned will be smaller than fixed charge coverage.
B)times interest earned will be greater than fixed charge coverage.
C)times interest earned will be the same as fixed charge coverage.
D)fixed charge coverage cannot be computed.

Question

Quizplus · Accepted Answer

Times interest earned only considers interest expenses, while fixed charge coverage includes both interest and lease payments, making it smaller.

If a Firm Has Both Interest Expense and Lease Payments