If a firm has a large quantity of depreciation expense on its income statement, one would expect:

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Depreciation expense is a non-cash expense that reduces net income but does not actually require a cash outflow. Therefore, if a firm has a large quantity of depreciation expense on its income statement, its TIE ratio (which measures the ability to cover interest expense with operating income) will be lower than its cash coverage ratio (which measures the ability to cover all fixed charges, including interest and principal payments, with operating cash flow).

If a Firm Has a Large Quantity of Depreciation Expense