This solvency calculator divides EBIT by interest expense to estimate how many times operating profit covers interest payments.
Finance
Interest Coverage Ratio Calculator
Calculate EBIT divided by interest expense.
Calculator
About this calculator
Formula notes
interest coverage ratio = EBIT / interest expense.
Worked examples
- Example: EBIT of 100,000 with 25,000 interest expense gives a ratio of 4 and a 'Strong' assessment.
- EBIT of 60,000 with interest expense of 20,000 gives a coverage ratio of 3 and a Strong assessment.
How to use it
- Enter earnings before interest and taxes.
- Enter the interest expense for the same period.
- Read the coverage ratio and its assessment label.
Frequently asked questions
What does a ratio below 1 mean?
The tool labels it 'Insufficient' because operating profit does not cover interest expense.
Is this a complete credit check?
No. It is one static metric; debt structure, cash-flow timing, and industry context still matter.
Limits and interpretation
- The ratio uses EBIT as entered and ignores depreciation-adjusted cash flow, lease obligations, preferred dividends, and debt maturity structure.
- A single-year ratio is not a complete credit assessment; compare with sector norms and multi-period trends.