A ratio used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) of one period by the company's interest expenses of the same period:
Interest coverage ratio = EBIT/Interest Expense
The lower the ratio, the more the company is burdened by debt expense. And the result is depends on industry average.
Interest coverage ratio = EBIT/Interest Expense
The lower the ratio, the more the company is burdened by debt expense. And the result is depends on industry average.
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