Which one of the following statements is correct? If the total debt ratio is gre

Question

Which one of the following statements is correct? If the total debt ratio is greater than .50, then the debt equity ratio must be less than 1.0 Long-term creditors would prefer the times interest earned ratio be 1.4 rather than 1.5 The debt-equity ratio can be computed as 1 plus the equity multiplier An equity multiplier of 1.2 means a firm has S1.20 in sales for every $1 in equity An increase in the depreciation expense will not affect the cash coverage ratio Which one of the following best illustrates that the management of a firm is adhering to the goal of fin

Explanation / Answer

option e is correct.

Depreciation is non cash expense and thus will not affect cash coverage ratio

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