The ____ ratio is a more severe measure of a firm's ability to meet fixed financial obligations.
A) acid test
B) debt
C) fixed-charge coverage
D) debt-to-equity

Question

Quizplus · Accepted Answer

The fixed-charge coverage ratio measures a firm's ability to meet all of its fixed financial obligations, including interest, lease, and insurance payments. It is a more severe measure than the debt ratio or debt-to-equity ratio, which only consider a firm's debt obligations. The acid test ratio measures a firm's ability to pay its current liabilities with its current assets, but does not take into account fixed financial obligations.

The ____ Ratio Is a More Severe Measure of a Firm's