interest coverage

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.

Times Interest Earned

A measure of a company's ability to service its debts. It is calculated by dividing the company's earnings before interest and taxes by the total interest payable on its debts, expressed as a ratio. Investors prefer publicly-traded companies to have a middling times-interest-earned ratio. A low ratio indicates an inability to service debts, while too high a ratio indicates a lack of debt that investors may find undesirable.

interest coverage

A measure of a firm's ability to meet required interest obligations. A high coverage ratio indicates enhanced ability to make timely interest payments. Interest coverage is calculated by dividing the firm's operating income by its required interest payments. Also called times interest earned. Compare fixed-charge coverage. See also debt management ratio.
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References in periodicals archive ?
Recommended cash flow ratios that analyze a company's ability to meet these obligations include cash interest coverage, cash debt coverage and cash dividend coverage.
Developing ratios for effective cash flow statement analysis
Additionally, Alfa Corp continues to demonstrate strong interest coverage capacity with an earnings based interest coverage ratio of 17.
Fitch Affirms Alfa's Ratings
27, 2006 payment date, failing senior interest coverage tests have diverted principal proceeds to pay the senior secured note principal, but once these tests were cured, principal cashflows have been used to pay interest on the second priority senior notes.
Fitch Downgrades One Class of Pinnacle CBO, Ltd
Financial covenants in the $1 billion bank facility include a maximum leverage ratio of 3 times (x) and minimum interest coverage ratio of 3x.
Fitch Revises Outlook on EDS to Positive; Debt Affirmed at 'BBB-'
For 2007, Fitch projects that ETR's FFO interest coverage will be in the range of 4.
Fitch Revises Outlook on Entergy Corp. & Subsidiaries to Stable; Ratings Affirmed
Offsetting factors include decline in market position and lowered interest coverage ratio due to the declined earnings.
A.M. Best Affirms Ratings for Pacific Century Insurance Company Ltd
All overcollateralization (OC) and interest coverage (IC) tests continue to pass with cushion.
Fitch Affirms 7 Classes of TCW High Income Partners Ltd
If the ratio of the Company's consolidated earnings before interest, taxes, depreciation and amortization, as defined in the notes, to the Company's consolidated cash interest expense (the "Consolidated Interest Coverage Ratio") is less than 2.
International Assets to Issue $27 Million in Senior Subordinated Convertible Notes
Financial leverage at LFG associated with the acquisition of CTGI is expected to increase to approximately 33%, from 27% at June 30, 2006, while interest coverage is expected to trend closer to 5 times (x) compared to 7x coverage currently.
Fitch Ratings Downgrades LandAmerica
Fitch's ratings reflect RLI's consistently strong underwriting profitability, moderate financial leverage, and strong earnings-based and cash basis interest coverage.
Fitch Affirms RLI Corp. Ratings; Outlook Stable
The ratings reflects Markel's good interest coverage and moderate financial leverage.
Fitch Rates New Markel Corp. Sr Notes 'BBB-'
Consolidated financial leverage and interest coverage are within expectations for the current ratings.
A.M. Best Upgrades Ratings of American Equity

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