Investment Language 101 Series: TERM OF THE DAY: -- What Is: ' Coverage Ratio ' | E.70 | Trading Candle Cheat Sheet Incl. Each Episode.
A series designed to help all the new people flooding into & entering Crypto/Investments daily who get thrown into the rabbit hole so to speak and everything is new to them.
Bitshares 101 Focus/Resources Section for New Crypto Folks now included near the end of each post - starting just prior to Christmas 2017. BTS is a Decentralized Exchange and much more. Very undervalued!
It is a TLDR / Short Form Series, covering ONLY one thing each episode in blue collar, easy to understand language to give a SHORT OVERVIEW of the term or lesson of the day.
It is specifically designed this way to keep it short and simple.
People can then search out extra info if they wish.
I've never seen a regular series or resource running on Steemit to continually address this basic need so I decided to do it.
TERM OF THE DAY:
What is....
' Coverage Ratio ' ?
--
The coverage ratio is a measure of a company's ability to meet its financial obligations. In broad terms, the higher the coverage ratio, the better the ability of the enterprise to fulfill its obligations to its lenders. The trend of coverage ratios over time is also studied by analysts and investors to ascertain the change in a company's financial position.
--
Breaking Down...
' Coverage Ratio ' :
--
Common coverage ratios include the interest coverage ratio, debt service coverage ratio and the asset coverage ratio. While a comparison of coverage ratios of companies in the same industry or sector will provide valuable insights into their relative financial positions, comparing ratios across companies in different sectors will not prove as useful, since it may be tantamount to comparing apples and oranges.
The use of coverage ratios can help identify companies in a potentially troubled financial situation but low ratios are not automatically indicative of danger. Many factors go into determining these ratios and a deeper dive into a company's financial statements is often recommended to ascertain the business' health. Net income, interest expense, debt outstanding and total assets are just a few examples of the financial statement items that should be examined.
Some of the more commonly used coverage ratios are analyzed below.
-- Interest Coverage Ratio:
The interest coverage ratio measures the ability of a company to pay the interest expense on its debt. The ratio, also known as the times interest earned ratio, is defined as a company's earnings before interest and taxes (EBIT) divided by interest expense. An interest coverage ratio of two or higher is generally considered satisfactory.
-- Debt Service Coverage Ratio:
The debt service coverage ratio measures how well a company is able to pay its entire debt service. Debt service includes all principal and interest payments due to be made in the near term. The ratio is defined as net operating income divided by total debt service. A ratio of one or above is indicative that a company generates sufficient earnings to completely cover its debt obligations.
-- Asset Coverage Ratio:
The asset coverage ratio is similar in nature to the debt service coverage ratio but looks at balance sheet assets instead of income in comparison to debt levels. The ratio is defined as a company's total tangible assets minus any short-term liabilities divided by its total debt outstanding.
Generally speaking, a ratio of two or above suggests that the company has sufficient assets on hand to manage its debt load, although an acceptable figure may vary depending upon the industry the company operates in.
Your Friend in Liberty, Barry.
Trading Candle Cheat Sheet:
--
Further Reading/Source/Resources
Friend of the People -- Enemy of the State.
--
Bitshares 101 Focus/Resources Section:
for New Crypto Folks.
https://bitshares.org/
--
-- Bitshares is a Trading platform, and a LOT more.... designed by blockchain wizard here Dan Larimer - @dan / @dantheman.
I've blogged on him, and BTS many many times.
It's a place you can use that is decentralized, with an active community, to use trading lessons like this, that we are learning together.
Just a few of my past $BTS blogs....
to help you apply lessons today!
--
Thanks for reading, have a nice day.
PixaBay has tons of free pictures for us all to use!!!
Super Easy/Fast Picture Edits / Resizing at: http://www.picresize.com/ and also https://www298.lunapic.com/editor/
If you liked this blog post - please Resteem it and share good content with others!
--
Some of my recent blogs:
--
Most Images: Gif's - via Giphy.com , Funny or Die.com / Pixabay. Today:
If you feel my posts are undervalued or you want to donate to tip me - I would appreciate it very much.
--
LiteCoin (LTC) - LKdsnvSXk9JW99EiNicFMGKc1FXiBo9tUE
EOS (EOS) - 0xD37bEFf5bf07E3aa432de00cE0AaA8df603A4fB0
Ethereum (ETH) - 0x3Ad69Ff057C9533ca667B2d7E3E557F5eeFd4477
Ethereum Classic (ETC) - 0x5ab2b08d4ce8d454eb9d1ecc65c6d8b0c5f9784c
Bitcoin (BTC) - 18J6RRuzX4V7b2CDbx7tWZYNBLkkGWsvWX
DASH - XgZvsvSZgPkNbmGbRhc3S1Pt2JAc7QHwiS
PIVX - DA3azxQqJiX9t7EviuacpamfNhMi2zGAUh
Stratis (STRAT) - SNsJp6v1jXvKWy4XcXSXfNQ9zhSJJppJgv
ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
A series designed to help all the new people flooding into & entering Crypto/Investments daily who get thrown into the rabbit hole so to speak and everything is new to them.
Bitshares 101 Focus/Resources Section for New Crypto Folks now included near the end of each post - starting just prior to Christmas 2017. BTS is a Decentralized Exchange and much more. Very undervalued!
It is a TLDR / Short Form Series, covering ONLY one thing each episode in blue collar, easy to understand language to give a SHORT OVERVIEW of the term or lesson of the day.
It is specifically designed this way to keep it short and simple.
People can then search out extra info if they wish.
I've never seen a regular series or resource running on Steemit to continually address this basic need so I decided to do it.
TERM OF THE DAY:
What is....
' Coverage Ratio ' ?
--
The coverage ratio is a measure of a company's ability to meet its financial obligations. In broad terms, the higher the coverage ratio, the better the ability of the enterprise to fulfill its obligations to its lenders. The trend of coverage ratios over time is also studied by analysts and investors to ascertain the change in a company's financial position.
--
Breaking Down...
' Coverage Ratio ' :
--
Common coverage ratios include the interest coverage ratio, debt service coverage ratio and the asset coverage ratio. While a comparison of coverage ratios of companies in the same industry or sector will provide valuable insights into their relative financial positions, comparing ratios across companies in different sectors will not prove as useful, since it may be tantamount to comparing apples and oranges.
The use of coverage ratios can help identify companies in a potentially troubled financial situation but low ratios are not automatically indicative of danger. Many factors go into determining these ratios and a deeper dive into a company's financial statements is often recommended to ascertain the business' health. Net income, interest expense, debt outstanding and total assets are just a few examples of the financial statement items that should be examined.
Some of the more commonly used coverage ratios are analyzed below.
-- Interest Coverage Ratio:
The interest coverage ratio measures the ability of a company to pay the interest expense on its debt. The ratio, also known as the times interest earned ratio, is defined as a company's earnings before interest and taxes (EBIT) divided by interest expense. An interest coverage ratio of two or higher is generally considered satisfactory.
-- Debt Service Coverage Ratio:
The debt service coverage ratio measures how well a company is able to pay its entire debt service. Debt service includes all principal and interest payments due to be made in the near term. The ratio is defined as net operating income divided by total debt service. A ratio of one or above is indicative that a company generates sufficient earnings to completely cover its debt obligations.
-- Asset Coverage Ratio:
The asset coverage ratio is similar in nature to the debt service coverage ratio but looks at balance sheet assets instead of income in comparison to debt levels. The ratio is defined as a company's total tangible assets minus any short-term liabilities divided by its total debt outstanding.
Generally speaking, a ratio of two or above suggests that the company has sufficient assets on hand to manage its debt load, although an acceptable figure may vary depending upon the industry the company operates in.
Your Friend in Liberty, Barry.
Trading Candle Cheat Sheet:
--
Further Reading/Source/Resources
Friend of the People -- Enemy of the State.
--
Bitshares 101 Focus/Resources Section:
for New Crypto Folks.
https://bitshares.org/
--
-- Bitshares is a Trading platform, and a LOT more.... designed by blockchain wizard here Dan Larimer - @dan / @dantheman.
I've blogged on him, and BTS many many times.
It's a place you can use that is decentralized, with an active community, to use trading lessons like this, that we are learning together.
Just a few of my past $BTS blogs....
to help you apply lessons today!
--
Thanks for reading, have a nice day.
PixaBay has tons of free pictures for us all to use!!!
Super Easy/Fast Picture Edits / Resizing at: http://www.picresize.com/ and also https://www298.lunapic.com/editor/
If you liked this blog post - please Resteem it and share good content with others!
--
Some of my recent blogs:
--
Most Images: Gif's - via Giphy.com , Funny or Die.com / Pixabay. Today:
If you feel my posts are undervalued or you want to donate to tip me - I would appreciate it very much.
--
LiteCoin (LTC) - LKdsnvSXk9JW99EiNicFMGKc1FXiBo9tUE
EOS (EOS) - 0xD37bEFf5bf07E3aa432de00cE0AaA8df603A4fB0
Ethereum (ETH) - 0x3Ad69Ff057C9533ca667B2d7E3E557F5eeFd4477
Ethereum Classic (ETC) - 0x5ab2b08d4ce8d454eb9d1ecc65c6d8b0c5f9784c
Bitcoin (BTC) - 18J6RRuzX4V7b2CDbx7tWZYNBLkkGWsvWX
DASH - XgZvsvSZgPkNbmGbRhc3S1Pt2JAc7QHwiS
PIVX - DA3azxQqJiX9t7EviuacpamfNhMi2zGAUh
Stratis (STRAT) - SNsJp6v1jXvKWy4XcXSXfNQ9zhSJJppJgv
ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
--
LiteCoin (LTC) - LKdsnvSXk9JW99EiNicFMGKc1FXiBo9tUE
EOS (EOS) - 0xD37bEFf5bf07E3aa432de00cE0AaA8df603A4fB0
Ethereum (ETH) - 0x3Ad69Ff057C9533ca667B2d7E3E557F5eeFd4477
Ethereum Classic (ETC) - 0x5ab2b08d4ce8d454eb9d1ecc65c6d8b0c5f9784c
Bitcoin (BTC) - 18J6RRuzX4V7b2CDbx7tWZYNBLkkGWsvWX
DASH - XgZvsvSZgPkNbmGbRhc3S1Pt2JAc7QHwiS
PIVX - DA3azxQqJiX9t7EviuacpamfNhMi2zGAUh
Stratis (STRAT) - SNsJp6v1jXvKWy4XcXSXfNQ9zhSJJppJgv
ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
Great job it will be helpful for people.
Resteem because i found good content.
what a beautiful post, I see was a painstaking job. Thank you.
Thanks dear sharing this post..And discuss cyptocurrance ..Waiting your next post..
Good that investing news so far....thanks for sharing this is
Thank you for the information
As usual great post. Thanks for keeping us all informed. Resteemed!
Thank you for the term and the break down on its meaning and situations which can change the situation. Out of curiosity in your opinion what would be a good example of a company with good Coverage Ratio?