Interest Coverage Ratio (ICR)

Interest Coverage Ratio (ICR) Calculation







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Interest coverage ratio formula & calculator to find the ratio between the earnings before interest and taxes (EBIT) to interest expenses of a company. It's a financial risk assessment indicator used by the investors to measure the ability of a company to pay its interest on its liabilities for a specific time period usually a year. A higher interest coverage ratio generally more than 1 indicates that the company is more capable of paying the interest expenses on its debts and a lower ICR less than 1 indicates that the company may face the financial risks and bankruptcy.

Formula
Interest Coverage Ratio (ICR) = EBIT/Interest Expenses