Management ratios-capitalization ratios and coverage ratios

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Reference no: EM131613725

Which of the following statements about debt management ratios is false?

1) There are two types of debt management ratios: capitalization ratios and coverage ratios.

2) Capitalization ratios use balance sheet data to measure the relative amount of debt financing used.

3) Coverage ratios use income statement data to measure the extent to which earnings (or cash flow) cover interest (or fixed financial) obligations.

4) The debt ratio is a capitalization ratio while the debt-to-equity ratio is a coverage ratio.

5) The debt ratio is defined as total debt divided by total assets.

Reference no: EM131613725

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