Fixed financial charges include
A) stock repurchase expense.
B) bond interest expense and preferred stock dividends.
C) common stock dividends and bond interest expense.
D) common stock dividends and preferred stock dividends.

Question

Quizplus · Accepted Answer

Fixed financial charges refer to the regular payments a company has to make to its creditors and preferred stockholders. This includes bond interest expense and preferred stock dividends. Choice A is incorrect because stock repurchase expense is not a fixed financial charge. Choice C and D are incorrect because common stock dividends are not considered fixed financial charges.

Fixed Financial Charges Include