The coverage ratios are similar to liquidity ratios in that they describe the quantity of funds available to “cover” certain expenses. We will examine two very similar ratios that describe the firm’s ability to meet its interest payment obligations. In both cases, higher ratios are desirable to a degree. However, if they are too high, it may indicate that the firm is under-utilizing its debt capacity, and therefore not maximizing shareholder wealth. The Times Interest Earned Ratio The times [...]
Archive for Category: "Coverage Ratios"
Most recent Articles
- Considering Whether Using Perpetual or Periodic Inventory System
- How Good Do You Manage Your Accounts Receivable?
- Identifying Problems in a Financial Statements and How To Minimize it?
- Understanding the Logics Behind a Financial Statements
- After e-File for Business, IRS Opened Free e-File for Individual
- Accounting For Lease: Operating and Capital Lease 43 comments
- Accounting Treatment: Discount, Sales Return & Warranty 37 comments
- Sales Order - Free Excel Spreadsheet 34 comments
- Deferred Income Taxes [Deferred Tax Liabilities] With Case Example 30 comments
- Accounting For Property Plant And Equipment [IAS 16] 30 comments
- Accounting For Lease: Operating and Capital Lease 16431 views
- Accounting Flowchart: Purchasing, Receiving, Payable and Payment 15432 views
- Capitalization And Amortization Of Software Cost 12132 views
- Journal Entry For Inventory Transactions 11013 views
- Horizontal Vs Vertical Analysis of Financial Statements 8820 views
- When Should Costs Be Capitalized? [Case Study] 8398 views
- Deferred Income Taxes [Deferred Tax Liabilities] With Case Example 7224 views
- Temporary and Permanent Differences [Accounting for Income Tax] 6911 views
- Difference and Similarities of Internal Auditor Vs. External Auditor 6707 views
- Disposition Of Underapplied And Overapplied Overhead Cost 6355 views
Recents Comments
Latest From Accounting
- Considering Whether Using Perpetual or Periodic Inventory System
- How Good Do You Manage Your Accounts Receivable?
- Identifying Problems in a Financial Statements and How To Minimize it?
- Understanding the Logics Behind a Financial Statements
- What and Why Responsibility Centers, How To Coordinate the Centers
