Answer: deteriorated.

## Explanation To determine the company's creditworthiness based on the interest coverage ratio using EBITDA, we need to calculate the EBITDA interest coverage ratio for both years and compare them. **Step 1: Calculate EBITDA for each year** EBITDA = Operating Income + Depreciation and Amortization - **Year 1:** EBITDA = 168 + 422 = 590 - **Year 2:** EBITDA = 217 + 416 = 633 **Step 2: Calculate EBITDA interest coverage ratio for each year** EBITDA Interest Coverage Ratio = EBITDA ÷ Interest Expense - **Year 1:** 590 ÷ 120 = 4.92 - **Year 2:** 633 ÷ 155 = 4.08 **Step 3: Analyze the trend** - Year 1 ratio: 4.92 - Year 2 ratio: 4.08 The ratio has decreased from 4.92 to 4.08, indicating that the company's ability to cover its interest payments with EBITDA has deteriorated. **Step 4: Interpretation** A lower EBITDA interest coverage ratio means the company has less cushion to cover its interest obligations. This suggests: 1. Increased financial risk 2. Reduced creditworthiness 3. Higher probability of default Therefore, based on the interest coverage ratio using EBITDA, the company's creditworthiness has **deteriorated**. **Key Points:** - While EBITDA increased from 590 to 633 (7.3% increase), interest expense increased from 120 to 155 (29.2% increase) - The disproportionate increase in interest expense relative to EBITDA growth caused the coverage ratio to decline - A ratio above 2-3 is generally considered acceptable, but the downward trend is concerning for credit analysis

Author: LeetQuiz .