Which of the following factors is evaluated by coverage ratios?

Coverage ratios, such as the interest coverage ratio or the debt service coverage ratio, are specifically designed to measure a company's ability to meet its debt-related obligations using its available cash flow. These ratios evaluate how comfortably a company can pay interest on its outstanding debts or fully service its debt by comparing cash flow or earnings before interest and taxes to interest or debt obligations.

For example, a high coverage ratio indicates that a company has a strong capability to meet its debt obligations, suggesting financial stability and less risk for lenders and investors. Conversely, a low coverage ratio may signal potential difficulties in servicing debts, potentially leading to financial distress.

The other factors listed do not directly pertain to coverage ratios. For instance, generating sales revenue, managing operational costs, and controlling inventory costs are important for a company’s overall efficiency and profitability but are not the primary focus of coverage ratios. These ratios are strictly concerned with the relationship between cash flow and debt obligations, thus highlighting their specific role in assessing financial health regarding debt servicing.