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Interest coverage ratio, or ICR, is used to evaluate a company’s ability to pay the interest it owes on its debts. There is no generally agreed upon standard for what makes a healthy ICR across ...
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.
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 ...
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.
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A financial ratio or accounting ratio states the relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting , there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization.
A country's international finances are healthier when this ratio is low. For most countries the ratio is between 0 and 20%. In contrast to the debt service coverage ratio, which is calculated as income divided by debt, this ratio is inverse and calculated as debt service divided by country's income from international trade, i.e., exports.
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 ...