Why Do Companies Buy Back Shares?
In practice, there are many companies that choose to buy back shares as their primary (and only) approach to returning profits to investors. One question that might arise is why exactly companies decide to repurchase their own shares when they could just pay out dividends to their shareholders directly instead? In the following, we will […]
Can Companies Have a Negative Interest Coverage Ratio?
What’s the Interest Coverage Ratio? The interest coverage ratio measures a company’s capability to meet its interest payments based on its current pre-tax operating earnings. It is defined as follows: EBIT stands for earnings before interest and taxes and represents the profits that a firm has generated from its day-to-day operations. We use EBIT since […]
