What is Coverage Ratio?
Coverage Ratio A financial metric that measures a company’s ability to service its debt or other fixed obligations, commonly including interest coverage, debt service coverage, and fixed-charge coverage ratios.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Coverage Ratio” Used in Practice?
The interest coverage ratio assesses a firm’s ability to meet interest payments from operating earnings.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Coverage Ratio?
A financial metric that measures a company’s ability to service its debt or other fixed obligations, commonly including interest coverage, debt service coverage, and fixed-charge coverage ratios.
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