The interest coverage ratio measures the ability of the company to
A) meet interest payments as they are due.
B) turn over inventory.
C) collect overdue accounts.
D) earn a profit.

Question

Quizplus · Accepted Answer

The interest coverage ratio is a financial metric used to determine a company's ability to pay the interest on its debt with its earnings before interest and taxes (EBIT), thus it directly relates to a company's ability to meet interest payments as they are due.

The Interest Coverage Ratio Measures the Ability of the Company