Question 1

Debt service coverage is equal to:

Options :

A : (gross income + debts + depreciation + amortization) / maximum half year debt service payments

B : (net income + interest + depreciation + amortization) / maximum annual debt service payments

C : (net income + expenses + depreciation + amortization) / minimum annual interest service payments

D : (net income + revenues + appreciation + amortization) / minimum half year interest service payments

Answer: B

Question 2

Selling accounts receivable at a discount, usually to a financial institution is called:

Options :

A : Factoring

B : Discounted rate

C : Financial accounts

D : None of the above

Answer: A

Question 3

The formula for times interest earned ratio is:

Options :

A : [{(excess of revenues _ expenses) + interest expense}/ expected expense]

B : [(excess of revenues over expenses _ interest expense) / interest revenue]

C : [(excess of revenues over expenses + interest expense) / interest expense]

D : [(excess of revenues over expenses + interest expense) / interest expense]

Answer: C

Question 4

An asset with clear value that is pledged against a loan to reduce risk to the lender is known as:

Options :

A : Pledged asset

B : Collateral

C : Mortgage

D : Bank Term loan

Answer: B

Question 5

Direct financial benefits to investors can take which two forms?

Options :

A : Periodic payments in form of dividends and financial returns

B : Periodic interest and retained earnings

C : Periodic payments in form of dividends and retained earnings

D : None of the above

Answer: C