coverage ratio

Coverage Ratio

Any ratio measuring one's ability to pay a certain expense. There are various kinds of coverage ratio. For example, one may take a ratio of a company's monthly cash flow to its monthly debt service. Generally speaking, a coverage ratio at or above 1 indicates that a company can pay the stated expense, while a ratio below 1 indicates the opposite.

coverage ratio

A measure of a corporation's ability to meet a certain type of expense. In general, a high coverage ratio indicates a better ability to meet the expense in question. See also dividend coverage, fixed-charge coverage, interest coverage, preferred dividend coverage.
References in periodicals archive ?
Global Banking News-April 25, 2016--China said to be planning for lower bad loan coverage ratio
The cash interest coverage ratio should complement the traditional interest coverage ratio.