Income Statement

Interest Coverage

Measures the relationship between financial burden and its coverage and the company's ability to pay. Its purpose is to estimate resilience under profit declines, higher rates, maturities and refinancing needs.

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Interest Coverage

interestCoverage · Income Statement

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Definition: Measures the relationship between financial burden and its coverage and the company's ability to pay. Its purpose is to estimate resilience under profit declines, higher rates, maturities and refinancing needs.
Calculation: EBIT / interest expense.
Uses: Key in utilities, real estate, industrials, telecom, roll-ups and cyclicals. In banks and insurers it must be read with sector-specific regulatory ratios. Complement with maturities, covenants, interest coverage, FCF, liquidity and net debt.