Coverage ratios may be used to measure the safety of debt and other fixed obligations.

Name: Coverage ratios may be used to measure the safety of debt and other fixed obligations.
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Question

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Coverage ratios, such as the interest coverage ratio, debt service coverage ratio, and cash coverage ratio, are financial metrics used to evaluate a company's ability to pay off its debt and other fixed obligations, indicating the safety of such debts.

Coverage Ratios May Be Used to Measure the Safety of Debt