Interest Coverage Ratio Calculator
Divide operating profit (EBIT) by interest expense to see how many times over a business can cover the interest on its debt.
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Enter EBIT and interest expense to see the ratio.
Worked example
With these example inputs:
- EBIT (operating profit)$120,000
- Interest expense$20,000
Interest coverage ratio: 6
- The other way round0.17
- If the first figure were 10% higher6.60
Frequently asked questions
What does interest coverage tell me?
It shows how comfortably operating profit covers interest payments. A ratio of 5 means profit is five times the interest due, which is a healthy cushion.
What is a worrying level?
A ratio close to 1 means almost all operating profit goes to interest, leaving little room for error. Lenders often watch for figures below 1.5 to 2.