The ________________ refers to the number of times earnings before interest and taxes of a company covers the interest obligations.

debt service coverage ratio

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interest coverage ratio

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return on investment

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debt equity ratio

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Solution

The correct option is A interest coverage ratio
The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest on its outstanding debt. The interest coverage ratio may be calculated by dividing a company's earnings before interest and taxes (EBIT) during a given period by the company's interest payments due within the same period.

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