Interest coverage ratio


Also found in: Acronyms.

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 base case results in a maximum debt/EBITDA of 7.6x in FY19 and minimum interest coverage ratio of 2.3x in FY28.
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.
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.