If lease payments are reduced and everything else remains constant,
A)times interest earned goes up.
B)fixed charge coverage goes up.
C)fixed charge coverage stays the same.
D)fixed charge coverage goes down.

Question

Quizplus · Accepted Answer

Fixed charge coverage is a measure of a company's ability to pay its fixed expenses, including lease payments. Therefore, if lease payments are reduced, the company's fixed charge coverage will increase because there will be more funds available to cover other fixed expenses.

If Lease Payments Are Reduced and Everything Else Remains Constant