Monday, November 9, 2015

WSJ: What Is the Interest Coverage Ratio?

By SIMON CONSTABLE

What is the interest coverage ratio, and why might it matter for investors? 
The interest coverage ratio is a measure of how affordable a company’s debt is given the company’s earnings. Or put another way, how much cushion there is for a firm to withstand hiccups in the business and still make its debt payments—an important consideration for investors.
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