Explore commonly used personal finance terms.
The asset coverage ratio is a financial metric that assesses a company’s ability to meet its debt obligations with its assets. It is calculated by dividing total assets minus liabilities by the total debt. A higher ratio indicates stronger debt coverage, showing that the company has enough assets to repay its creditors in the event of liquidation. This ratio is particularly important for investors and creditors, providing insight into a company’s solvency and financial health.
