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“fall in interest cover from 6.6 times to (1.5) times over the same period, indicating that the business is unable to service its current levels of finance.”
ma’am how can such a fall in interest cover, from positive to negative, indicate that the company is unable to service its debt? I mean as long as the company has positive cash balance/flow then its not kosher to say that company is unable to service its debt in my opinion. what do you think ma’am?
I don’t know what you are quoting from – but supposing (..) denotes negative, I would take that to mean that there is a LOSS which is 1.5 times the amount of interest. This is unsustainable. Yes you need cash to service debt – but unless you are making profit, how can you hope to have cash?
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