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Some ratios should be greater than one, and the bigger they are, the better. For example,
the interest coverage ratio should be greater than one, because you should have more
income to cover interest expenses than you have interest expenses, and the more you
have, the better. Figure 3.20 "Results of Ratio Analysis" suggests what to look for in the
results of your ratio analyses.
Figure 3.20 Results of Ratio Analysis
While you may have a pretty good “feel” for your situation just by paying the bills and
living your life, it so often helps to have the numbers in front of you. Here is Alice’s ratio
analysis for 2009 (Figure 3.21 "Alice’s Ratio Analysis, 2009").