BUSS1030 Study Guide - Final Guide: Management Accounting, Fixed Cost, Variable Cost
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Measures the amount of profit available to cover interest expense. The lower the level of profit coverage the greater the risk to lenders that not met interest payments. If a business borrows heavily then they need to pay the interest and make capital repayments. The interest coverage ratio measures the number of times profits before both interest and tax can cover interest expense. 5. investment assess the returns and performance of shares held by a business. dividends per share. Both types of costs are often associated with an activity, hence the importance to the decision-making process of understanding the quantity and impact of both. &stay the same when the volume of activity changes. They often must increase to allow higher output levels stepped fixed cost . &do not stay unchanged irrespective of level of output. change as a result of inflation or general price increases. Time based" i. e. they vary with the length of time concerned (1000 per month, then.
