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Interest Coverage Ratio Calculator

Divide operating profit by interest expense to see how many times over interest is covered.

About Interest Coverage Ratio Calculator

The ratio divides one figure by the other and is read against a conventional benchmark of 3. Both the ratio and its percentage form are shown, because different audiences expect different presentations of the same number. A coverage ratio compresses two absolute figures into one comparable number, which is what makes it usable across companies and periods of different size.

Formula

Interest Coverage Ratio

Interest Coverage Ratio = Operating profit (EBIT) ÷ Interest expense

Operating profit (EBIT)
Numerator of the ratio
Interest expense
Denominator of the ratio

Worked example

With the default values below, Interest Coverage Ratio Calculator returns Interest Coverage Ratio of 6.000. Change any input above and every figure here is recalculated in your browser.

Inputs used

Operating profit (EBIT)minimum 0
180,000
Interest expenseminimum 0
30,000

Results

Interest Coverage Ratio
6.000
Expressed as a Percentage
600.00%
Surplus Over the Benchmark
3.000
Inverse Ratio
0.167
Interpretation
Strong — comfortably above the comfortable benchmark of 3

Step by step

  1. 1Values used
  2. 2Interest Coverage Ratio
  3. 3Interest Coverage Ratio= 6.000
  4. 4Expressed as a Percentage= 600.00
  5. 5Surplus Over the Benchmark= 3.000
  6. 6Inverse Ratio= 0.167
  7. 7Interpretation= Strong — comfortably above the comfortable benchmark of 3

Assumptions and limits

  • The result is derived only from the 2 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Interest Coverage Ratio calculated?

Interest Coverage Ratio = Operating profit (EBIT) ÷ Interest expense The ratio divides one figure by the other and is read against a conventional benchmark of 3. Both the ratio and its percentage form are shown, because different audiences expect different presentations of the same number.

Why does Interest Coverage Ratio matter?

A coverage ratio compresses two absolute figures into one comparable number, which is what makes it usable across companies and periods of different size.

What values do I need to enter?

This calculator takes 2 inputs: Operating profit (EBIT), Interest expense. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.

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