✖Earnings Before Interest and Taxes is a measure of a firm's profit that includes all expenses except interest and income tax expenses.ⓘ Earnings Before Interest and Taxes [EBIT]			+10% -10%
✖Interest expense is a non-operating expense shown on the income statement.ⓘ Interest Expense [Int]			+10% -10%

✖Interest Coverage Ratio assesses a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT).ⓘ Interest Coverage Ratio [ICR]

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Formula

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Interest Coverage Ratio

Formula

`"ICR" = "EBIT"/"Int"`

Example

`"4500"="450000"/"100"`

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Interest Coverage Ratio Solution

STEP 0: Pre-Calculation Summary

Formula Used

Interest Coverage Ratio = Earnings Before Interest and Taxes/Interest Expense
ICR = EBIT/Int
This formula uses 3 Variables

Variables Used

Interest Coverage Ratio - Interest Coverage Ratio assesses a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT).
Earnings Before Interest and Taxes - Earnings Before Interest and Taxes is a measure of a firm's profit that includes all expenses except interest and income tax expenses.
Interest Expense - Interest expense is a non-operating expense shown on the income statement.

STEP 1: Convert Input(s) to Base Unit

Earnings Before Interest and Taxes: 450000 --> No Conversion Required
Interest Expense: 100 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

ICR = EBIT/Int --> 450000/100

Evaluating ... ...

ICR = 4500

STEP 3: Convert Result to Output's Unit

4500 --> No Conversion Required

FINAL ANSWER

4500 <-- Interest Coverage Ratio

(Calculation completed in 00.004 seconds)

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< 2 Coverage Ratios Calculators

Fixed Charge Coverage Ratio

Go Fixed Charge Coverage Ratio = (Earnings Before Interest and Taxes+Fixed Charges Before Taxes)/(Fixed Charges Before Taxes+Interest)

Interest Coverage Ratio

Go Interest Coverage Ratio = Earnings Before Interest and Taxes/Interest Expense

< 22 Important Formulas of Financial Ratios Calculators

Fixed Charge Coverage Ratio

Go Fixed Charge Coverage Ratio = (Earnings Before Interest and Taxes+Fixed Charges Before Taxes)/(Fixed Charges Before Taxes+Interest)

Free Cash Flow to Firm

Go Free Cash Flow to Firm (FCFF) = Cash Flow from Operations+(Interest Expense*(1-Tax Rate))-Net Capital Expenditures

Economic Value Added

Go Economic Value Added = Net Operating Profit After Tax-Weighted Average Cost of Capital*Total Invested Capital

Average Collection Period

Go Average Collection Period = Accounts Receivable/(Sales for Reporting Period/Reporting Period Length)

Revenue Growth Rate

Go Revenue Growth Rate = ((Current Period Revenue-Previous Period Revenue)/Previous Period Revenue)*100

Sales Growth Rate

Go Sales Growth Rate = ((Current Period Sales-Previous Period Sales)/Previous Period Sales)*100

Business Quick Ratio

Go Quick Ratio = (Current Assets-Inventory of Liquidity Ratio)/Current Liabilities

Quick Ratio

Go Quick Ratio = (Current Assets-Inventory of Liquidity Ratio)/Current Liabilities

Interest Coverage Ratio

Go Interest Coverage Ratio = Earnings Before Interest and Taxes/Interest Expense

Debt to Equity Ratio

Go Debt to Equity (D/E) = Total Liabilities/Total Shareholders' Equity*100

Market Capitalization

Go Market Capitalization = Current Share Price*Total Shares Outstanding

Receivables Turnover Ratio

Go Receivables Turnover Ratio = Net Sales/Average Accounts Receivables

Free Cash Flow

Go Free Cash Flow = Cash Flow from Operations-Net Capital Expenditures

Fixed Asset Turnover Ratio

Go Fixed Asset Turnover Ratio = Net Sales/Average Net Fixed Assets

Equity Multiplier

Go Equity Multiplier = Total Assets/Total Shareholders' Equity

Inventory Turnover Ratio

Go Inventory Turnover Ratio = Cost of Goods Sold/Inventory

Sales to Receivables Ratio

Go Sales to Receivables Ratio = Net Sales/Net Receivables

Debt to Assets Ratio

Go Debt to Assets Ratio = Total Liabilities/Total Assets

Business Current Ratio

Go Current Ratio = Current Assets/Current Liabilities

Current Ratio

Go Current Ratio = Current Assets/Current Liabilities

Cash Flow to Sales

Go Cash Flow to Sales = Operating Cash Flow/Sales

Total Asset Turnover

Go Total Asset Turnover = Sales/Total Assets

Interest Coverage Ratio Formula

Interest Coverage Ratio = Earnings Before Interest and Taxes/Interest Expense
ICR = EBIT/Int

What is Interest Coverage Ratio?

The Interest Coverage Ratio, also known as the times interest earned (TIE) ratio, is a solvency ratio that measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). In other words, it indicates how many times a company can pay its interest charges on outstanding debt using its operating income.
A higher Interest Coverage Ratio indicates that a company is more capable of servicing its debt obligations, as it signifies that the company generates sufficient operating income to cover its interest expenses comfortably. Conversely, a lower ratio suggests that the company may have difficulty meeting its interest payments and could be at risk of defaulting on its debt.

How to Calculate Interest Coverage Ratio?

Interest Coverage Ratio calculator uses Interest Coverage Ratio = Earnings Before Interest and Taxes/Interest Expense to calculate the Interest Coverage Ratio, The Interest Coverage Ratio formula is defined as a solvency ratio that measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). Interest Coverage Ratio is denoted by ICR symbol.

How to calculate Interest Coverage Ratio using this online calculator? To use this online calculator for Interest Coverage Ratio, enter Earnings Before Interest and Taxes (EBIT) & Interest Expense (Int) and hit the calculate button. Here is how the Interest Coverage Ratio calculation can be explained with given input values -> 4500 = 450000/100.

FAQ

What is Interest Coverage Ratio?

The Interest Coverage Ratio formula is defined as a solvency ratio that measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT) and is represented as ICR = EBIT/Int or Interest Coverage Ratio = Earnings Before Interest and Taxes/Interest Expense. Earnings Before Interest and Taxes is a measure of a firm's profit that includes all expenses except interest and income tax expenses & Interest expense is a non-operating expense shown on the income statement.

How to calculate Interest Coverage Ratio?

The Interest Coverage Ratio formula is defined as a solvency ratio that measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT) is calculated using Interest Coverage Ratio = Earnings Before Interest and Taxes/Interest Expense. To calculate Interest Coverage Ratio, you need Earnings Before Interest and Taxes (EBIT) & Interest Expense (Int). With our tool, you need to enter the respective value for Earnings Before Interest and Taxes & Interest Expense and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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