As the interest coverage ratio increases,the risk for creditors decreases.

Question

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The interest coverage ratio measures a company's ability to pay interest on its debt. A higher interest coverage ratio indicates that a company has more earnings available to cover its interest expenses, which makes it less risky for creditors as they are more likely to be paid back. Therefore, as the interest coverage ratio increases, the risk for creditors decreases.

As the Interest Coverage Ratio Increases,the Risk for Creditors Decreases