The lower the fixed payment coverage ratio

The lower the fixed payment coverage ratio

Subject: Business    / Finance
Question

The lower the fixed payment coverage ratio, the lower the firm’s financial leverage. Agree or Disagree and why

The graph that shows the relationship between a security’s yield and its time to maturity is called the term structure of interest rates. Agree or Disagree and why

A firm has a current ratio of 1. In order to improve its liquidity ratios, this firm might:

A. Improve its collection practices, thereby increasing cash and increasing its current and quick ratios

B. Improve its collection practices and pay accounts payable, thereby decreasing current liabilities and increasing the current and quick ratios

C. Decrease current liabilities by utilising more long-term debt, thereby increasing the current and quick ratios

D. Increase inventory, thereby increasing current assets and the current and quick ratios

In a period of rising sales, utilising past cost and expense ratios (percent-of-sales method) when preparing pro forma financial statements and planning financing, will tend to:

A. Understate retained earnings and understate the additional financing needed

B. Overstate retained earnings and overstate the additional financing needed

C. Understate retained earnings and overstate the additional financing needed

D. Overstate retained earnings and understate the additional financing needed