Asset-Coverage Test

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Definition: Asset-Coverage Test

Asset-Coverage Test
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Full Definition of Asset-Coverage Test

A test that is used to determine whether or not a company will be allowed to issue bonds. This test is calculated by subtracting a company’s current liabilities from its net assets and then dividing the quantity by its total debts and / or preferred stock obligations. This can be expressed either as a dollar amount or as a percentage. Typically, a higher asset coverage test is preferable because this will indicate that the level of debt is low in comparison to net assets.

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https://payrollheaven.com/define/asset-coverage-test/
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Asset-Coverage Test. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
April 23, 2024 https://payrollheaven.com/define/asset-coverage-test/.
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Asset-Coverage Test. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/asset-coverage-test/ (accessed: April 23, 2024).
American Psychological Association (APA):
Asset-Coverage Test. PayrollHeaven.com. Retrieved April 23, 2024
, from PayrollHeaven.com website: https://payrollheaven.com/define/asset-coverage-test/

Definition Sources

Definitions for Asset-Coverage Test are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 19th November, 2021 | 0 Views.