DEBT CONVENANT COMPLIANCE Flashcards
1
Q
Calc, the interest coverage ratio?
A
To calc the interest coverage ratio
Operating income / interest expense
150,000 / 40,000 = 3.75 is greater than 3
2
Q
Calc, the current ratio?
A
current ratio is helpful in measuring short term liabillities and short term assets
To calc the current ratio first we need to
Current Assets / Current liabilitlies
200,000 / 100,000 = 2
