Interest Coverage Ratio Calculator
Enter operating income (EBIT) and annual interest expense to calculate the interest coverage ratio.
Interest Coverage Ratio Calculator
Calculate the interest coverage ratio — how easily a company can pay interest on its outstanding debt from operating earnings.
This calculator provides an estimate for general informational purposes only. It is not a substitute for professional financial, mechanical or engineering advice.
The interest coverage ratio divides operating earnings by interest expense, showing how many times over a company could pay its interest obligations from its core business earnings.
Example
- With the default values shown above, this calculator returns: Interest Coverage Ratio ≈ 5.00.
Frequently Asked Questions
What is the formula?
Interest Coverage Ratio = EBIT (Earnings Before Interest and Tax) ÷ Annual Interest Expense.
What's considered a healthy ratio?
A ratio above 2–3 is often considered a reasonable safety margin; a ratio below 1.5 can signal difficulty covering interest payments, and below 1 means operating income doesn't even cover interest.