Which of the following ratios recognizes that many firms lease rather than buying a long-term asset?
A) Fixed charge coverage ratio
B) Times interest earned ratio
C) Debt ratio
D) Net profit margin
E) Equity multiplier ratio

Question

Quizplus · Accepted Answer

The fixed charge coverage ratio takes into account both interest expenses and lease payments, making it the most appropriate ratio for recognizing firms that lease long-term assets. The other ratios listed do not specifically address leasing activity.

Which of the Following Ratios Recognizes That Many Firms Lease