where 
ebit earnings before interest and taxesan interest coverage ratio of two or higher is generally considered satisfactory the debt service coverage ratio dscr measures how well a company is able to pay its entire debt service debt service includes all principal and interest payments due to be made in the near term the ratio is defined as dscr net operating income total debt servicea ratio of one or above is indicative that a company generates sufficient earnings to completely cover its debt obligations the asset coverage ratio is similar in nature to the debt service coverage ratio but looks at balance sheet assets instead of comparing income to debt levels the ratio is defined as asset coverage ratio total assets short term liabilities total debt