1. Which of the following is true of the times-interest earned (TIE) ratio of a firm??
a. ?The TIE ratio is calculated by dividing net income by interest charges.
b. ?The TIE ratio shows the effects of both operating leverage and financial leverage.
c. ?The TIE ratio is always more than 1.
d. ?The lower the TIE ratio, the higher the probability that the firm will default on its debt.
e. ?The TIE ratio increases if the debt/assets ratio increases and vice versa.
2. A firm following the _____ makes payment of a specific dollar dividend each year or periodically increases the dividend at a constant rate.?
a. ?stable, predictable dividend policy
b. ?extra dividend policy
c. ?constant payout ratio dividend policy
d. ?free cash flow hypothesis
e. ?residual dividend policy