Interest coverage ratio


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Interest coverage ratio

The ratio of earnings before interest and taxes to annual interest expense. This ratio measures a firm's ability to pay interest.

Interest Coverage Ratio

A ratio of a company's EBIT to its total expenses from interest payments. The interest coverage ratio measures the company's ability to make interest payments, such as in its debt service. A ratio above one indicates that the company is able to pay its interest, while a ratio below one means that its interest payments exceed its earnings.
References in periodicals archive ?
In addition, the sixth amendment amends the calculation of Carmike's consolidated EBITDA for purposes of the consolidated leverage ratio and the interest coverage ratio.
In fact, the company's interest coverage ratio declined to 2.
Delphi Financial continues to maintain a debt-to-capital ratio of under 20% and an ample interest coverage ratio over 11 times.
25 times (x) and a minimum interest coverage ratio of 4.
0 times), and a minimum interest coverage ratio test (EBITDA not to be less than 2.
Tenneco Automotive is required to meet three financial ratios under its senior credit agreement: a maximum leverage ratio (total debt/EBITDA); a minimum interest coverage ratio (EBITDA/cash interest payments); and a minimum fixed charge coverage ratio (EBITDA - capital expenditures/cash interest payments).
The traditional accrual-based interest coverage ratio uses income before interest and taxes divided by interest expense.
Additionally, Alfa Corp continues to demonstrate strong interest coverage capacity with an earnings based interest coverage ratio of 17.

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