Typically, higher coverage ratios are preferred, but a very high ratio may indicate under-utilization of fixed-payment obligations, which may result in unnecessarily low risk and return.

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The statement is true. While higher coverage ratios are generally preferred, an excessively high ratio may indicate that the company is not taking enough risk and missing out on potential returns. This could be due to under-utilization of fixed-payment obligations, which can lead to low risk and low returns.

Typically, Higher Coverage Ratios Are Preferred, but a Very High