What is Debt Coverage Ratio in Forex Trading?

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.