Debt coverage, or debt service coverage, is the ability of a debtor to repay their debts.

Debt coverage is often used interchangeably with interest coverage ratio to indicate a party's debt-handling capacity, but the two are not the same. Interest coverage ratio is expressed as the ratio of annual net income to annual interest on outstanding debts. While there is no general rule, a ratio of net income to interest of 2.0:1 is usually considered healthy, since it suggests that the debtor can earn twice as much in a year as it can afford to pay in interest charges.

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