A high Debt Service Coverage Ratio indicates:

A high Debt Service Coverage Ratio indicates strong ability to meet debt obligations and greater capacity to take on additional debt.

Option 1 → Incorrect. A high DSCR does not directly imply that the equity component should decrease.

Option 2 → Correct. Strong debt-servicing capacity allows the company to increase the debt component.

Option 3 → Correct. A high DSCR shows enhanced capacity to meet interest and principal payments.

Option 4 → Incorrect. A high DSCR does not suggest reducing the debt component.

Therefore, Options 2 and 3 are correct.