Divide operating profit by interest expense to see how many times over interest is covered.
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.
Interest Coverage Ratio
Interest Coverage Ratio = Operating profit (EBIT) ÷ Interest expense
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.
A coverage ratio compresses two absolute figures into one comparable number, which is what makes it usable across companies and periods of different size.
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.