You are calculating the earnings to fixed charges ratio for a company. Which of the following is incorrect?
A) Interest expense is considered a fixed charge
B) Long-term rental payments are often considered fixed charges
C) Senior managements' salaries are normally considered fixed charges
D) Preferred stock dividends are normally considered fixed charges

Question

Quizplus · Accepted Answer

Senior managements' salaries are usually not considered fixed charges as they are not contractual obligations and can be adjusted or eliminated by the company.

You Are Calculating the Earnings to Fixed Charges Ratio for a Company