Some factors that determine financial risk include interest coverage and cash flow coverage.

Question

Quizplus · Accepted Answer

Interest coverage and cash flow coverage are both key indicators of financial risk. Interest coverage measures a company's ability to pay interest on its debt, while cash flow coverage measures its ability to generate enough cash to cover its debt service obligations. If a company has low interest coverage or cash flow coverage ratios, it may be at greater risk of defaulting on its debt obligations. Therefore, these factors are important considerations for investors and lenders when assessing financial risk.

Some Factors That Determine Financial Risk Include Interest Coverage and Cash