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The Interest Coverage Ratio Measures the Degree of Protection a Company

question 108

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The interest coverage ratio measures the degree of protection a company has from default on interest payments.


Definitions:

Average Tax Rates

The ratio of total taxes paid to total income, expressing the fraction of income that is paid in taxes.

Taxable Income

The portion of an individual's or corporation's income that is subject to taxation according to federal or state law.

Marginal Tax Rate

The rate at which an additional dollar of income would be taxed, reflecting the percentage of each additional dollar that is paid in tax.

Income Tax Schedule

A chart or table displaying the rates to be applied to income ranges for calculating the amount of income tax due.

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