Interest Coverage Ratio
Enter EBIT and interest expense to see how many times earnings can cover interest payments.
CalcSimpler Examples
- EBIT 60000, interest 10000 ⇒ 6
- EBIT 45000, interest 15000 ⇒ 3
- EBIT 80000, interest 20000 ⇒ 4
FAQ
What does a higher ratio mean?
Higher values indicate greater ability to meet interest obligations.
What if interest is zero?
The ratio becomes infinite, indicating no interest burden.
Can EBIT be negative?
Yes, but it signals financial difficulties.
Is this the same as times interest earned?
Yes, it's another name for the same metric.
What is considered a good ratio?
Many analysts prefer a ratio above 3 for comfortable coverage.
Does it use EBIT or EBITDA?
This calculator uses EBIT; some versions use EBITDA for industries with high depreciation.
Additional Information
- A value below 1 means earnings are insufficient to cover interest obligations.
- Commonly used by lenders and investors to assess financial risk.
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