When assessing the fixed-payment coverage ratio, ________.
A) the lower its value the more risky is the firm
B) the lower its value, the higher is the firm's financial leverage
C) preferred stock dividend payments can be disregarded
D) the higher its value, lesser is its reliability to pay up the debts

Question

Quizplus · Accepted Answer

A lower fixed-payment coverage ratio indicates that a firm has less income available to cover its fixed obligations, making it riskier.

When Assessing the Fixed-Payment Coverage Ratio, ________