Formula
to calculate interest coverage ratio:
Interest
Coverage Ratio
= (net income + interest) / interest.
Interest
coverage ratio definition and explanation:
The
interest coverage ratio is also referred to as the times
interest earned ratio.
The interest
coverage ratio indicates the extent of which
earnings are available to meet interest payments.
A lower
interest coverage ratio means less earnings are available
to meet interest payments and that the business is more
vulnerable to increases in interest rates.
The interest coverage ratio is included in the financial
statement ratio analysis spreadsheets highlighted in the
left column, which provide formulas, definitions,
calculation, charts and explanations of each ratio.
The interest coverage ratio is listed in our leverage
ratios.
The interest
coverage ratio and other ratios are key
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Spreadsheets to
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explanations and charts):
See list
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left column, to see which other ratios our spreadsheets
calculate, define and explain.
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(times interest earned) is included in our
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