What does asset coverage mean?

asset coverage meaning in Law Dictionary

the power for an organization to use its ASSETS to pay for a particular financial CLAIM or LIABILITY, such a course of DEBT or PREFERRED STOCK. Investment coverage are calculated via: in which TA equals total assets (expressed regarding BOOK VALUE or LIQUIDATING VALUE), IN is INTANGIBLES, Cl may be the claim being covered, ClSR is any claim ranking senior to Cl. The higher the asset protection, the more powerful the budget and freedom associated with company. ASSETFUNDING LIQUIDITY DANGER the possibility of reduction as a result of an inability to have unsecured funding at a fair economic expense, causing a forced pledge or purchase of POSSESSIONS confused. A subcategory of LIQUIDITY POSSIBILITY. See also INVESTMENT LIQUIDITY DANGER, ENDOGENOUS LIQUIDITY RISK, EXOGENOUS LIQUIDITYRISK, FUNDING LIQUIDITY RISK.

asset coverage meaning in Business Dictionary

Extent to which an entity's concrete assets are sufficient to satisfy its liabilities. Formula: (complete assets - Intangible assets - Current liabilities) ÷ obligation quantity.