The best financial ratio to determine a company's ability to pay debt is the debt ratio.

Question

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The best financial ratio to determine a company's ability to pay debt is the interest coverage ratio, which measures a company's ability to pay interest on its debt. The debt ratio only shows the amount of debt compared to total assets, but it does not indicate whether the company can make the required payments on that debt.

The Best Financial Ratio to Determine a Company's Ability to Pay