What is the benchmark by the debt coverage ratio?
A)Take home pay.
B)The amount available after deducting normal household overhead expenses from take-home pay.
C)The amount available after deducting unusual household overhead expenses from take-home pay.
D)Household expenses.
E)None of the above.

Question

Quizplus · Accepted Answer

The debt coverage ratio measures the cash flow available to pay debts by comparing the net operating income to the total debt payments due during a specific period. Therefore, the amount available after deducting normal household overhead expenses from take-home pay is the most relevant benchmark for this ratio.

What Is the Benchmark by the Debt Coverage Ratio