What is the Interest Cover ratio all about?

"Our lives improve only when we take chances - and the first and most difficult risk we can take is to be honest with ourselves." - Walter Anderson

Creating wealth is about risk taking.
But what kind of risk are you prepared to make?
Depending on your adventurous spirit you may take more than the average amount of risk for a particular venture.
The Interest Cover ratio is a measure of the debt risk you are taking. It measures how many times your interest is COVERED by your income.
For example if your total net income is $100 and your interest is $20, the interest cover is 5 times.
The number of times cover is a measure of the risk you are prepared to take with the fact that income can vary over time. The lower the cover, the higher the risk.

"Be not afraid of growing slowly, be afraid only of standing still." - Chinese proverb

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