Interest Coverage Ratio
The interest coverage ratio is a measure of a company's ability to meet its interest payments. A higher ratio indicates a better financial health as it means that the company is more capable to meeting its interest obligations from operating earnings.
A ratio less than 1 would indicate that a company has crippling debt obligations as it uses its entire earnings to pay interest, leaving no income for the common shareholders or to repay back the debt. In such extreme cases, the company would have to sell off its assets, or raise more equity in order to repay some of the debt -- so that it can reduce its interest expense and, in turn, improve the interest coverage ratio.