If the interest protection multiple is too low, enterprises will face the risk of loss, debt service security and stability decline. Although the enterprise interest protection multiple can maintain the normal solvency, but the interest protection multiple is too low, the enterprise will face the risk of loss, debt service security and stability decline. The main reason for the low interest multiple is that the company's total profit in mid-2018 was significantly lower than in the previous three years, indicating that the company did not have enough profits to pay its huge interest charges. Profits can only be made by reducing interest expense and borrowing. Having enough surplus to be able to pay interest expenses can enterprises develop in the long run.
If the interest protection multiple is too low, enterprises will face the risk of loss, debt service security and stability decline. Although the enterprise interest protection multiple can maintain the normal solvency, but the interest protection multiple is too low, the enterprise will face the risk of loss, debt service security and stability decline. The main reason for the low interest multiple is that the company's total profit in mid-2018 was significantly lower than in the previous three years, indicating that the company did not have enough profits to pay its huge interest charges. Profits can only be made by reducing interest expense and borrowing. Having enough surplus to be able to pay interest expenses can enterprises develop in the long run.
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