Interest Coverage Ratio

Quick Definition

Measures how well a company can make payments on its debt.

ResumeWriters.com

Interest Coverage Ratio Formula

Image of a Interest Coverage Ratio calculator
Calculate Interest Coverage Ratio with our online Interest Coverage Ratio Calculator.

Explanation of Interest Coverage Ratio

Similar to the Times Interest Earned ratio, the Interest Coverage Ratio measures how readily the company can pay its Interest Expense payments on its debt obligations.

Importance of Interest Coverage Ratio

A high, or increasing Interest Coverage Ratio is usually a positive sign, showing the company is better able to pay its Interest Expense with its earnings. A ratio result of 1.0 is minimal, showing the company is barely able to meet its expense payments. Depending on the industry, a ratio value of 1.5 to 2.0 is desirable.

Need a Business Loan?  Borrow up to $25,000. Fixed Rates. Use for Any Purpose. Instant Application.
Loading