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When the interest coverage ratio is smaller than one, the company is not generating enough cash from its operations EBIT to meet its interest obligations. The company would then have to either use cash on hand to make up the difference or borrow funds. Typically, it is a warning sign when interest coverage falls below 2.5x.
Coverage ratio may refer to Building coverage ratio, related to floor area ratio; Debt service coverage ratio; Interest coverage ratio This page was last edited on 6 ...
Interest Coverage Ratio is used to determine how effectively a company can pay the interest charges on its debt.
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A company that is capable of generating earnings well above its interest expense can withstand financial hardship. National Fuel (NFG), Herc Holdings (HRI), ONEOK (OKE) and CECO Environmental ...
The debt service coverage ratio (DSCR), also known as "debt coverage ratio" (DCR), is a financial metric used to assess an entity's ability to generate enough cash to cover its debt service obligations, such as interest, principal, and lease payments. The DSCR is calculated by dividing the operating income by the total amount of debt service due.
Repay the loan in full, at the lender's request, in certain events such as changes in the borrower's debt-to-equity ratio or interest coverage ratio. Credit insurance and credit derivatives – Lenders and bond holders may hedge their credit risk by purchasing credit insurance or credit derivatives. These contracts transfer the risk from the ...