High coverage ratios, compared with a standard, imply unused debt capacity.

Name: High coverage ratios, compared with a standard, imply unused debt capacity.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

High coverage ratios indicate that a company is generating significant cash flows, which means that they have the ability to take on more debt without jeopardizing their ability to meet their financial obligations. Therefore, high coverage ratios imply that there is unused debt capacity.

High Coverage Ratios, Compared with a Standard, Imply Unused Debt