UPSC Prelims 2020 · GS Paper 1 · Q72
Economy
Medium · Interest Coverage Ratio, Credit Risk
Consider the following statements regarding the 'Interest Coverage Ratio' of a firm:
1. It helps a lending bank assess the firm's present credit risk.
2. It helps a lending bank assess the firm's emerging or future credit risk.
3. A higher Interest Coverage Ratio indicates a weaker ability of the firm to service its debt.
Which of the statements given above is/are correct?