Tag: Debt Coverage Ratio

Debt Coverage Ratio (DCR) is a financial metric used to measure a company’s ability to service its debt. It is the ratio of a company’s available cash flow to its debt payments. Higher than average ratios are a sign of a healthy company with a solid ability to repay its debt. A DCR of 1.0 or higher is considered a good number and implies that the company has enough cash flow to service its debt obligations. A lower ratio indicates an increased risk of default. By analyzing the DCR of a company, investors and analysts can get an idea of how much risk is associated with a company and its debt.

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What is Debt Coverage Ratio in Forex Trading?

By Penny Grimes
August 26, 2023

4 min read

The Debt Coverage Ratio (DCR) is a financial ratio used to assess a company’s ability to service its outstanding debt obligations. This ratio compares a firm’s earnings before interest, taxes, depreciation, and amortization (EBITDA) to its total debt obligations, which includes both long-term and short-term debt. A higher DCR means that a company is more likely to be able to meet its debt obligations, as it has more income to service the debt. The DCR is used to assess the creditworthiness and risk associated with a company and its debt. It is an important tool for investors wanting to understand the ability of a company to sustain its debt payments.