Question : If the acceptable interest-coverage ratio is 6 or 7 times, whereas, the actual Ratio for this company is 3.08. It means...

Option 1: The profits of this company are 3.08 times in comparison to fixed interest charges.

Option 2: It indicates that the firm will not be able to pay the interest on long-term loans regularly.

Option 3: This ratio also indicates that the long-term solvency position of the company is not satisfactory.

Option 4: None of the above

Question : If the acceptable interest-coverage ratio is 6 or 7 times, whereas, the actual Ratio for this company is 3.08. It means...

Option 1: The profits of this company are 3.08 times in comparison to fixed interest charges.

Option 2: It indicates that the firm will not be able to pay the interest on long-term loans regularly.

Option 3: This ratio also indicates that the long-term solvency position of the company is not satisfactory.

Option 4: None of the above

Question : Which of the following statements is false with respect to the Interest coverage ratio?

Option 1: Profit before interest and income tax is to be taken for the calculation of this ratio.

Option 2: This ratio indicates how many times the interest charges are covered by the profits available to pay interest charges.

Option 3: This ratio measures the margin of safety for long-term lenders.

Option 4: The higher the ratio, the less secure the lender is in respect of payment of interest regularly.

Question : Which of the following statements is false with respect to the Interest coverage ratio?

Option 1: Profit before interest and income tax is to be taken for the calculation of this ratio.

Option 2: This ratio indicates how many times the interest charges are covered by the profits available to pay interest charges.

Option 3: This ratio measures the margin of safety for long-term lenders.

Option 4: The higher the ratio, the less secure the lender is in respect of payment of interest regularly.

Question : The liquidity ratio is also called________?

Option 1: Long-term solvency Ratio

Option 2: Medium-term solvency Ratio

Option 3: Short-term solvency Ratio

Option 4: All of the above

Question : If the debt-equity ratio is 0.43: 1. What will the ratio indicate with respect to the company's financial position?

Option 1: It indicates that the long-term financial position of the company is very sound

Option 2: It indicates that the long-term financial position of the company is weak

Option 3: It indicates that the short term financial position of the company is very sound

Option 4: It indicates that the short-term financial position of the company is very weak