Interest coverage ratio

(redirected from Interest Coverage Ratios)

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 ?
The Hartford's debt-to-total capital ratio (excluding accumulated other comprehensive income) and interest coverage ratios are generally within AM Best's guidelines for its current ratings.
AM Best views LNC's debt-servicing capabilities as adequate, with sufficient liquidity to service its debt, a well-laddered debt maturity structure, neutral interest coverage ratios and financial leverage ratios that remain within AM Best's guidelines for the company's current ratings.
A material increase in the leverage or decline in interest coverage ratios on a sustained basis and/or a change in strategy that led to a reduction in revenue diversification or a more balance sheet intensive business model could also pressure the ratings.
consumer balance sheet remains relatively healthy, consumer debt service burdens near record lows given low interest rates, Corporate debt ratios near a 20-year high -- however, interest coverage ratios remain within normal range due to continued low rate environment.
The charts "Frequency and Range of Outcomes for EBIT" and "Frequency and Range of Outcomes for Interest Coverage Ratios" show histograms that illustrate the frequency and range of outcomes for the EBIT and interest coverage ratios based on the 100,000 replications of the calculation.
Profit margins and interest coverage ratios also improved, while free cash flows for the group swelled to a record $93bn.
These limits could apply to lending in terms of loan-to-value ratios or interest coverage ratios (ICRs).
The predictability of future interest coverage ratios is supported by high level of fixed rate debt, which increased to 93% of total debt as of September 2014 from 66% in FY2012.
At the end of 2013/14, they had debts of more than Rs 1,000 crore, debt-equity ratios of more than three and interest coverage ratios of less than 1.5.
Fitch says its outlook could change if brokers were to see a "material increase in financial leverage and corresponding weaker cash-based interest coverage ratios"; if the economy were to dip back into a recession or if pricing was to fall significantly; or if the industry were to experience an unanticipated earnings decline.
Fitch says its outlook could change if brokers were to see a "material increase in financial leverage and corresponding weaker cash-based interest coverage ratios," if the economy were to dip back into a recession or if pricing was to fall significantly, or if the industry were to experience an unanticipated earnings decline.
EBITDA, it was argued, was a better measure of debt service capabilities than the other traditional interest coverage ratios, such as EBIT/Interest.