👉 Ratability is a term in accounting that refers to a financial instrument's ability to pay its principal and interest payments on time. It involves assessing whether an investment or other financial asset can be repaid with enough funds available, given the expected future cash flows of the investment and market conditions. In general, ratability is important for investors because it helps them assess the risk of their investments and determine whether they should consider purchasing a security that has a high probability of paying its principal and interest.
