[1940] Ch. 17 GUARA…
11 months, 3 weeks ago

In this chapter, it proposes including one-third of annual rentals with fixed charges in the calculation and reducing the minimum coverage required for retail businesses, although the article acknowledges the limitations of the proposed standards and the potential for unexpected results.

My question is, since the coverage is reduced from 3 to 2 which is the same as that of railroad companies, is retail business as stable as railroad business? Plus, will this method equalize those who rent and those who own the stores? While it might be true for counting 1/3 of rentals toward fixed charges, how about capitalizing the total fixed obligations? Should we use that 1/3 ratio or the whole rentals?

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