If the cash coverage ratio exceeds the times interest earned ratio,then the firm has:
A) a positive cash flow.
B) depreciable assets.
C) no long-term debt.
D) short-term debts.

Question

Quizplus · Accepted Answer

The cash coverage ratio includes non-cash expenses like depreciation in its calculation, while the times interest earned ratio does not. If the cash coverage ratio is higher, it indicates the presence of depreciable assets contributing to non-cash expenses.

If the Cash Coverage Ratio Exceeds the Times Interest Earned