MANAGEMENT

Detailed explanation-1: -A company’s interest coverage ratio determines whether it can pay off its debts. The ratio is calculated by dividing EBIT by the company’s interest expense. A higher interest coverage ratio means a company is more poised it is to pay its debts while the opposite is true for lower ratios.

Detailed explanation-2: -Generally, a higher interest coverage ratio is better than a lower one. A higher ratio represents a stronger ability to meet a company’s interest expenses out of its operating earnings. Too low of an interest coverage ratio can signify that a company may be in peril if its earnings or economic conditions worsen.

Detailed explanation-3: -High-interest coverage ratio is more better because it shows high payment capacity of interest of the business.

Detailed explanation-4: -The interest coverage ratio measures how many times a company can cover its current interest payment with its available earnings. In other words, it measures the margin of safety a company has for paying interest on its debt during a given period.