If a firm's cash coverage ratio is greater than its times interest earned ratio,then:
A) the firm's assets are not fully depreciated.
B) the firm has no lease obligations.
C) the firm has very little long-term debt.
D) the firm has a high degree of liquidity.

Question

Quizplus · Accepted Answer

The cash coverage ratio includes non-cash expenses like depreciation in its calculation, so if it is greater than the times interest earned ratio, it suggests that the firm has significant non-cash expenses, indicating that its assets are not fully depreciated.

If a Firm's Cash Coverage Ratio Is Greater Than Its