A high interest-coverage ratio indicates a business's difficulty in paying interest expense.

Name: A high interest-coverage ratio indicates a business's difficulty in paying interest expense.
Brand: Quizplus
Rating: 4.7 (28 reviews)

Question

Quizplus · Accepted Answer

A high interest-coverage ratio indicates that a business is capable of easily paying interest expense, as it has a large amount of operating income relative to its interest expenses. A low interest-coverage ratio, on the other hand, indicates a potential difficulty in paying interest expense.

A High Interest-Coverage Ratio Indicates a Business's Difficulty in Paying