From a cash flow position,which one of the following ratios best measures a firm's ability to pay the interest on its debts?
A)Times interest earned ratio
B)Cash coverage ratio
C)Cash ratio
D)Quick ratio
E)Debt-equity ratio

Question

Quizplus · Accepted Answer

The cash coverage ratio measures a firm's ability to pay its interest expenses from its cash flows. It is calculated by dividing a firm's operating cash flow by its total interest expense. A higher cash coverage ratio indicates that the firm has sufficient cash flows to cover its interest payments.

From a Cash Flow Position,which One of the Following Ratios