Which of the following is not a flow ratio? A) Interest coverage B) Fixed charge coverage C) Debt/equity D) Cash flow/long term debt E) Cash flow/total debt

Question

Quizplus · Accepted Answer

Debt/equity is a leverage ratio that compares a company's total debt to its shareholder equity. It is not considered a flow ratio, which measures the ability of a company to generate cash flow. The other options listed are all flow ratios. Interest coverage measures a company's ability to pay its interest expenses with its operating income. Fixed charge coverage measures a company's ability to pay both interest and fixed expenses with its operating income. Cash flow/long term debt and cash flow/total debt both measure a company's ability to generate cash flow relative to its debt obligations.

Which of the Following Is not a Flow Ratio