What does a coverage ratio measure?
A)The company's ability to pay the interest on its debt
B)The company's ability to pay the principal amount of its debt
C)The company's ability to "cover" (pay)its operating expenses
D)The company's ability to "cover" (meet)shareholder return expectations

Question

Quizplus · Accepted Answer

Coverage ratios primarily measure a company's ability to pay the interest on its debt, indicating its financial health and the risk level for creditors.

What Does a Coverage Ratio Measure