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Aren't they the same thing? A/B ==> B divided into A, or A divide by B.
A: earning before paying B, B: interests net of interest expense.
> -----Original Message-----
> From: Goring,Karl(NXI)
> Sent: Tuesday, April 20, 1999 2:31 PM
> To: studygroup10@lists.casact.org
> Subject: Maginn & Tuttle - Interest Coverage Ratio
>
> Did anyone notice that in Maginn & Tuttle, "Managing Investment
> Portfolios: A Dynamic Approach," the interest coverage ratio is defined
> differently in Chapters 4 (page 53) and Chapter 6 (Page 23). It looks as
> if they are reciprocals.
>
> Chapter 4 Definition: The interest coverage ratio is defined as interest
> plus earnings divided by interest.
> Chapter 6 Definition: The interest coverage ratio is equal to interest
> expense, inclusive of capitalized interest and some lease rental expense,
> divided into earnings before the deduction of this interest expense and
> taxes.
>
> Does anybody know which definition is customarily used?
>
> Regards,
> Karl Goring
>
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Aren't they the same thing? =A/B =3D=3D> B divided into A, or A divide by =B. A: earning before paying B, B: interests net of interest =expense.
-----Original Message-----
From: Goring,Karl(NXI)
Sent: Tuesday, April 20, 1999 2:31 PM
To: studygroup10@lists.casact.org
Subject: = Maginn & Tuttle - Interest =Coverage Ratio
Did anyone notice that in Maginn & =Tuttle, "Managing Investment Portfolios: A Dynamic Approach," =the interest coverage ratio is defined differently in Chapters 4 (page =53) and Chapter 6 (Page 23).=A0 It looks as if they are =reciprocals.
Chapter 4 Definition:=A0 The interest =coverage ratio is defined as interest plus earnings divided by =interest.
Chapter 6 Definition:=A0 The =interest coverage ratio is equal to interest expense, inclusive of =capitalized interest and some lease rental expense, divided into =earnings before the deduction of this interest expense and =taxes.
Does anybody know which definition is =customarily used?
Regards,
Karl Goring