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Cash coverage ratio

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Updated: Aug 20, 2021

Cash coverage ratio

The cash coverage ratio is useful for determining the amount of cash available to pay for a borrower’s interest expense, and is expressed as a ratio of the cash available to the amount of interest to be paid. To show a sufficient ability to pay, the ratio should be substantially greater than 1:1.

Reference: accountingtools.com


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James Knight
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James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.