What would an increase in the accrual based interest coverage ratio be an indication of?
A)That interest rates have risen.
B)That the company's solvency has improved.
C)That the company's solvency has deteriorated.
D)That the company's use of financial leverage has increased.

Question

Quizplus · Accepted Answer

An increase in the accrual based interest coverage ratio (EBIT / Interest Expense) means that the company's earnings can cover its interest payments more easily, indicating an improvement in its solvency.

What Would an Increase in the Accrual Based Interest Coverage