The cash debt coverage ratio is calculated by dividing net cash provided by operating activities by
A) average long-term liabilities.
B) average total liabilities.
C) ending long-term liabilities.
D) ending total liabilities.

Question

Quizplus · Accepted Answer

The cash debt coverage ratio measures a company's ability to repay its total liabilities using its cash from operating activities. Therefore, the denominator should include all the liabilities, making B the best choice as it considers average total liabilities.

The Cash Debt Coverage Ratio Is Calculated by Dividing Net