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Ability to Pay

Definition: A borrower's ability to meet the interest and principal payments on his or her debts. In other words, the borrower's ability to carry the interest payment on his or her income statement and payoff thDefinition: e principal out of net profits. Definition: [crh] Refers to the borrower's ability to make interest and principal payments on debts.Definition: See: Fixed charge coverage ratio.
In context of municipal bonds, refers to the iDefinition: ssuer's present and future ability to create sufficient tax revenue to fulfill its contractual obligations, accounting for municipal income and property values. Definition: r> In context of taxation, notion that tax rates should be determined according to income or wealth.

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