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Intermediate

A company generates $60 million of EBITDA and pays $20 million of cash interest. What is its interest coverage ratio?

  1. A. 0.33x
  2. B. 2.0x
  3. C. 4.0x
  4. D. 3.0xCorrect

Takeaway. Interest coverage is EBITDA divided by cash interest, a direct read on payment capacity.

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