The base case results in a maximum debt/EBITDA of 7.6x in FY19 and minimum interest coverage ratio
of 2.3x in FY28.
To estimate EBIT and compute the interest coverage ratio
, the CFO analyzes the company's cost structure.
* Interest Coverage Ratio
: (*) EBIT / Interest Expense
In order to thoroughly envisage the interest coverage ratio
in Serbian trade it is necessary to analyse the relationship between the capital and interest (capital/interest) which, for the period 2008-2013, was as follows: 2008--7,17, 2009--7,80, 2010--5,06, 2011--7,16, 2012--6,08, and 2013--11,32 (author's calculation based on the data of Business registers agency).
Foss (1995) finds that the EBITDA interest coverage ratio
is highly correlated to the market's relative risk levels as a function of the credit rating.
Interest Coverage Ratio
has increased from 2.9 in H1 2011 to 6.1 in H1 2012.
vi) Interest Coverage Ratio
- 19.44 times from 13.29 times
The second is the interest coverage ratio
, which is measured as earnings before interest and taxes (EBIT) over current interest expenses and captures the firm's ability to generate sufficient revenues to meet interest expenses.
For the purpose of this paper the interest coverage ratio
is used as a comparative cash flow ratio exists.
The Bank added that it received bids worth JD107 million with an interest coverage ratio
between 4.250-5.250 percent.
"We throw in an interest coverage ratio
so that they can, within seconds, assess a company's financial success, forecast if they're going to do better or worse and then drill down the details of the statement.
Also, the minimum required interest coverage ratio
, which is defined as a ratio of consolidated EBITDA to consolidated interest expense for the previous four quarters, has been decreased to 2.00 to 1 for each quarter through June 30, 2010, from the previous covenant of 2.75 to 1.