Earnings per share determines the firm's ability to pay its long-term debt.

Question

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Earnings per share (EPS) is a measure of a company's profitability and shows the portion of a company's profit allocated to each outstanding share of common stock. It does not directly determine a firm's ability to pay its long-term debt. Other financial ratios such as debt-to-equity, interest coverage ratio, and debt service coverage ratio are used to assess a company's ability to pay its debts on a long-term basis.

Earnings Per Share Determines the Firm's Ability to Pay Its