The ratio that indicates if a borrowing company will be able to meet its required interest payments is the "Interest Coverage Ratio" or "Times Interest Earned Ratio".

Here are the steps to calculate it:

1. Identify the Earnings Before Interest and Taxes (EBIT) from the company's income statement. This is the company's income before taking into account interest and taxes.

2. Identify the interest expense, which is also found on the income statement. This is the amount of interest the company has to pay on its debt.

3. Divide the EBIT by the interest expense. The formula is: Interest Coverage Ratio = EBIT / Interest Expense.

The resulting number is the Interest Coverage Ratio. If the ratio is less than 1, it means the company is not generating enough earnings to cover its interest expenses and could be at risk of default. If the ratio is 1 or more, it means the company is able to cover its interest expenses with its earnings. The higher the ratio, the more able the company is to cover its debt.

Question

The ratio that indicates if a borrowing company will be able to meet its required interest payments is the "Interest Coverage Ratio" or "Times Interest Earned Ratio".

Here are the steps to calculate it:

1. Identify the Earnings Before Interest and Taxes (EBIT) from the company's income statement. This is the company's income before taking into account interest and taxes.

2. Identify the interest expense, which is also found on the income statement. This is the amount of interest the company has to pay on its debt.

3. Divide the EBIT by the interest expense. The formula is: Interest Coverage Ratio = EBIT / Interest Expense.

The resulting number is the Interest Coverage Ratio. If the ratio is less than 1, it means the company is not generating enough earnings to cover its interest expenses and could be at risk of default. If the ratio is 1 or more, it means the company is able to cover its interest expenses with its earnings. The higher the ratio, the more able the company is to cover its debt.

Knowee AI · Accepted Answer

The ratio that indicates if a borrowing company will be able to meet its required interest payments is the "Interest Coverage Ratio" or "Times Interest Earned Ratio".

Here are the steps to calculate it:

1. Identify the Earnings Before Interest and Taxes (EBIT) from the company's income statement. This is the company's income before taking into account interest and taxes.

2. Identify the interest expense, which is also found on the income statement. This is the amount of interest the company has to pay on its debt.

3. Divide the EBIT by the interest expense. The formula is: Interest Coverage Ratio = EBIT / Interest Expense.

The resulting number is the Interest Coverage Ratio. If the ratio is less than 1, it means the company is not generating enough earnings to cover its interest expenses and could be at risk of default. If the ratio is 1 or more, it means the company is able to cover its interest expenses with its earnings. The higher the ratio, the more able the company is to cover its debt.

The ratio that indicates if a borrowing company will be able to meet its required interest payments is the

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The ratio that indicates if a borrowing company will be able to meet its required interest payments is the

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