How can the company increases it's interest coverage ratio ? Explain

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The interest coverage ratio refers to the ratio that is used for determining the number of times an organization can make the interest payment on its debt by its earnings before interest and taxes for a specific period of time that is usually one year. It is an ability of the organization for meeting its interest payment.

It is often used by the organization for evaluating its financial condition. A company with increased ICR is sustainable, whereas an organization with decreased ICR could counter the issue related to the liquidity. A good and enhanced interest coverage ratio is considered significant by both the investors and the market analysts as an organization could not grow or survive unless it could pay its interest on its existing debts. The few ways in which an organization could increase its interest coverage ratio are as follows:

· Increasing the net operating income

· Decreasing operating expenses

· Paying off some existing debt

· Decreasing the borrowing amount

keosha answered 2 hours ago

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