Now, companies will not have to bother with that cross-reference. Foreign operations. Similarly, the SEC eliminated the requirements to disclose under Item material risks associated with an issuer's foreign operations and any segment's dependence on foreign operations. Major customers; product revenue. Depending on FASB's decision regarding integration of this information into the applicable GAAP requirement, modifications could result in PSLRA safe harbor and other financial statement disclosure issues, as well as issues arising out of the elimination or inclusion of bright-line disclosure thresholds.
Market prices. The SEC has updated the market price disclosure requirements: instead of requiring disclosure of the high and low sales prices and sales price as of the latest practicable date — which are readily available for free on numerous websites on a daily basis and likely more up to date — Item a 1 is being amended to eliminate the detailed disclosure requirement to provide sale or bid prices for most issuers with common equity traded in an established public trading market and replaced with disclosure of the trading symbol.
More specifically:. The amendments also streamline the various redundant and overlapping requirements in Regulations S-X and S-K to discuss dividends. The SEC is eliminating the requirement in Item to disclose restrictions that currently or are likely to materially limit the company's ability to pay dividends on its common equity; instead, companies will be required to provide disclosure of material restrictions on dividends only in the notes to the financial statements under Regulation S-X.
Likewise, the amendments eliminate the requirement in Item to disclose the frequency and amount of cash dividends declared for the two most recent fiscal years and any subsequent interim period; rather, the amendments will mandate that Rule of Regulation S-X, which currently requires financial statement disclosure of the amount of dividends per share and in the aggregate, be applied to interim periods.
In light of the broader GAAP requirement to disclose the terms of significant contracts to issue additional shares and other reasonably similar information, the SEC has eliminated the Item requirement to disclose on Form S-1 or Form 10 the amount of common equity subject to outstanding options, warrants or convertible securities, when the class of common equity has no established US public trading market.
Equity compensation plan table. Another overlapping provision that was proposed to be eliminated is instead being retained and referred to FASB for potential incorporation into GAAP: the SEC decided not to eliminate the mandate in Item d to provide tabular disclosure regarding existing equity compensation plans approved and not approved by shareholders.
This information is currently required in a number of different forms, including Forms K and proxy statements. In the proposal, the SEC had suggested elimination of the provision because it overlapped with a similar GAAP requirement and because the SEC believed that drawing the distinction between plans approved and not approved by shareholders was no longer useful to investors because the major exchanges now require, with limited exceptions, plan approvals by shareholders.
However, relocating the disclosure to the financial statement notes would raise potential liability issues in the absence of PSLRA protection and would mean that the disclosure would no longer appear alongside information about equity compensation plans subject to shareholder action. At the end of the day, the SEC decided to retain and refer to FASB the overlapping requirement, recognizing the concerns expressed by commenters that GAAP does not explicitly require certain information that could be material to investors, such as the formula for calculating the number of securities available for issuance under the applicable plan.
Note, however, that, while the final rules currently retain Item d , referring it to FASB, they surprisingly still eliminate the provisions in Schedule 14A proxy statements and Form K that currently mandate the inclusion of Item d disclosure in those documents. As a result, although item d disclosure would continue to be required in Form S-1 and Form 10, unless the staff indicates otherwise, under the new amendments, Item d disclosure would not be required in proxy statements or Forms K.
In informal discussions with the staff, we have been advised that the staff is aware of the issue and is considering it. The amendments eliminate Instruction 5 to Item b regarding seasonality because it required disclosures that convey reasonably similar information to that required under GAAP and the remainder of Item Ratio of earnings to fixed charges.
The amendments eliminate the requirement in Item d to disclose the historical and pro forma ratio of earnings to fixed charges and ratio of combined fixed charges and preference dividends to earnings in connection with the registration of debt securities and preference equity securities. The SEC observed that now a "variety of analytical tools are available to investors that may accomplish a similar objective as the ratio of earnings to fixed charges. Earnings per share. The final amendments eliminate Item b 11 , which requires a statement showing the calculation of per-share earnings unless the computation can be determined from information already in the report in annual filings.
In connection the elimination of Item d , the related Item b 12 exhibit filing requirement has been eliminated. Reports to shareholders.
Various reports to security holders, required to be filed as exhibits under Items b 19 and 22 , are also eliminated in light of, in the former case, other exhibit provisions or, in the latter case, the requirement to disclose shareholder voting results in a Form 8- K.
With regard to those incremental disclosure requirements that were referred to FASB for consideration of whether they should be incorporated into GAAP, the SEC requested that FASB determine whether to add these items to its agenda within 18 months after publication of the adopting release in the Federal Register. Select basic ads. Create a personalised ads profile.
Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Financial Ratios Guide to Financial Ratios. Key Takeaways The fixed-charge coverage ratio FCCR shows how well a company's earnings can be used to cover its fixed charges such as rent, utilities, and debt payments.
Lenders often use the fixed-charge coverage ratio to assess a company's overall creditworthiness. A high FCCR ratio result indicates that a company can adequately cover fixed charges based on its current earnings alone.
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A fixed charge is any type of fixed expense that recurs on a regular basis, regardless of the volume of a business, in contrast to variable expense. Why the Interest Coverage Ratio Matters The interest coverage ratio is a debt and profitability ratio used to determine how easily a company can pay interest on its outstanding debt. Coverage Ratio Coverage ratios measure a company's ability to service its debt and meet its financial obligations.
Leverage Ratio A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or that assesses the ability of a company to meet financial obligations. Partner Links. Related Articles. Financial Ratios How do companies use the fixed charge coverage ratio? Financial Ratios What is a bad interest coverage ratio?
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