Final answer:
The fixed charge coverage ratio is considered broader than the times interest earned ratio as it includes all fixed charges such as lease payments and interest, offering a more comprehensive view of a firm's financial obligations and capabilities.
Step-by-step explanation:
The fixed charge coverage ratio is a broader measure of a firm's coverage capabilities than the times interest earned ratio because it includes a wider range of obligations. While the times interest earned ratio focuses exclusively on a company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT), the fixed charge coverage ratio encompasses all fixed charges a company is obligated to pay, not just interest. This means the fixed charge ratio takes into account payments for things like lease payments in addition to interest, providing a more comprehensive view of the firm's ability to meet its fixed financial obligations.
Option (c) 'The fixed charge ratio includes lease payments as well as interest payments' best represents why the fixed charge coverage ratio is a broader measure. Furthermore, choice (d) 'The fixed charge ratio includes both operating and capital leases whereas the times interest earned ratio includes only operating leases' also contributes to the comprehensiveness of the fixed charge coverage ratio. However, it's important to note that both ratios serve as measures to determine the financial health of a company regarding its fixed obligations, but the fixed charge coverage ratio just does it more extensively.