Sale of Receivables with Recourse - Interest Coverage Ratio total, why, increase, interest, purposes

wonderfuldream

For analytical purposes, anyone know why you should add interest expense to both income and expense? i.e. EBIT and interest expense increase by the same total amount. However, the interest coverage ratio falls.

mnieman

Before I attempt to explain this just check if the curricullum actually covers this. I think Schweser's been a little stupid here by overcomplicating it....

Check if the TB dives into the interest coverage ratio at all w.r.t sale of receivables with recourse...



Edited 1 time(s). Last edit at Sunday, August 23, 2009 at 03:45AM by beatthecfa.