A fixed charge coverage:
A)is a balance sheet indication of debt carrying ability.
B)is an income statement indication of debt carrying ability.
C)is a liquidity ratio.
D)frequently includes research and development.
E)computation is standard from firm to firm.

Question

Quizplus · Accepted Answer

A fixed charge coverage ratio is used to determine a company's ability to meet its fixed payment obligations such as interest, rent, and other fixed expenses based on its operating income. This is an income statement indication of debt carrying ability.

A Fixed Charge Coverage