Interest Coverage Ratios: Assessing Vulnerabilities in Nonfinancial Corporate Credit

Jack McCoy, Francisco Palomino, Ander Pérez-Orive, Charles Press and Gerardo Sanz-Maldonado
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Ander Pérez-Orive: https://www.federalreserve.gov/econres/ander-perez-orive.htm

No 2020-12-03-1, FEDS Notes from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This note examines whether the ability of nonfinancial corporations to meet their interest expenses out of earnings is a vulnerability for financial stability under current economic conditions. We measure this ability using the interest coverage ratio (ICR)—the ratio of earnings before interest and taxes relative to interest expenses—and project this ratio under different scenarios.

Date: 2020-12-03
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfn:2020-12-03-1

DOI: 10.17016/2380-7172.2779

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