The more variable are a borrower's cash flows, the lower the fixed charge coverage ratio should be to limit risk.

Name: The more variable are a borrower's cash flows, the lower the fixed charge coverage ratio should be to limit risk.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A borrower with more variable cash flows should have a higher fixed charge coverage ratio to ensure they can cover fixed charges even during periods of low cash flow, thereby limiting risk.

The More Variable Are a Borrower's Cash Flows, the Lower