L/T Debt

Question 1

the effective interest rate for a loan restricted in troubled debt restructuring is based on:

Answer 1

the original contractual rate

Question 2

Long-term debt often has covenants in the debt contract. The covenants are to protect…

Answer 2

lending institution

Question 3

The market price of a bond issued at a premium is equal to the present value of its principal amount:

Answer 3

and the present value of all future interest payments, at the market (effective) interest rate

Question 4

What type of bonds mature in installments

Answer 4

Serial Bonds

Question 5

Sales Lease-back, gains should report as

Answer 5

Gain will not be recognized on the I/S, but would be reported as a deferred credit in the liability section on the B/S. It will be amortized over the term of the lease

Question 6

defensive-interval ratio

Answer 6

The defensive-interval ratio is a measure of time the company can survive (continue to pay operating expenses in cash) using only the quick assets (cash, marketable securities, and net accounts receivable). Thus, it is computed by dividing total quick assets by average daily cash expenditures.