Its debt-to-equity ratio shows a company's ability to pay interest on its debts from its operating income.

Name: Its debt-to-equity ratio shows a company's ability to pay interest on its debts from its operating income.
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The debt-to-equity ratio measures a company's financial leverage by comparing its total liabilities to its shareholders' equity, not its ability to pay interest on its debts from operating income. The interest coverage ratio is used for assessing a company's ability to pay interest.

Its Debt-To-Equity Ratio Shows a Company's Ability to Pay Interest