Investing for Beginners , investing

Coverage ratios are financial ratios that measure the ability of the company to repay its financial liabilities. Such ratios compare company’s operating income (or other type of income) or operating cash flow to its interest expenses or liabilities. All these ratios may indicate the problem, however, to make a solid conclusion about company’s financial stability and insolvency risk deeper financial analysis should be implemented. 

These are the most popular coverage ratios: 

• Interest coverage ratio
• Times interest earned ratio 
• Debt coverage ratio
• Cash flow coverage ratio 
• Current cash debt coverage ratio 
• Cash coverage ratio