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   What is interest coverage ratio?

   • The "coverage" in the interest coverage ratio stands for the length of time—typically the number of quarters or fiscal years—for which interest payments can be made with the company's currently available earnings. In simpler terms, it represents how many times the company can pay its obligations using its earnings. The formula used is:

   Interest Coverage Ratio: Formula, How It Works, and Example - Investop…

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   What does a low-interest coverage ratio mean?

   • A low-interest coverage ratio means there is a low amount of profit available to meet the interest expense on the debt. Also, if the company has variable-rate debt, the interest expense will rise in a rising interest-rate environment. A high ratio indicates there are enough profits available to service the debt.

   Interest Coverage Ratio (ICR): What's Considered a Good Number?

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   What does a high interest coverage ratio mean?

   • Therefore, a higher interest coverage ratio indicates stronger financial health – the company is more capable of meeting interest obligations. However, a high ratio may also indicate that a company is overlooking opportunities to magnify their earnings through leverage.

   Interest Coverage Ratio - Guide How to Calculate and Interpret ICR

   corporatefinanceinstitute.com/resources/commercial-lending/interest-coverage-ratio/

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   What is interest coverage ratio (ICR)?

   • The interest coverage ratio (ICR) measures the ability of a company to meet scheduled interest obligations coming due on time. Besides the mandatory repayment of the original debt principal by the date of maturity, the borrower must also service its interest expense payments on schedule to avoid defaulting.

   Interest Coverage Ratio (ICR) | Formula + Calculator - Wall Street Prep

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2. www.investopedia.com › i › interestcoverageratioInterest Coverage Ratio: Formula, How It Works, and Example

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   Apr 22, 2024 · The interest coverage ratio, or times interest earned (TIE) ratio, is used to determine how well a company can pay the interest on its debts and is calculated by dividing EBIT (EBITDA or...

3. www.wallstreetprep.com › interest-coverage-ratioInterest Coverage Ratio (ICR) | Formula + Calculator

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   Apr 14, 2024 · Learn how to calculate the interest coverage ratio (ICR), which measures a company's ability to meet its interest payments on time. See different types of ICR, examples, and a calculator to estimate your own ICR.

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     Interest Coverage Ratio | Explained with Examples

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5. corporatefinanceinstitute.com › resourcesInterest Coverage Ratio - Guide How to Calculate and ...

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   Interest Coverage Ratio Formula. The interest coverage ratio formula is calculated as follows: Where: EBIT is the company’s operating profit (Earnings Before Interest and Taxes) Interest expense represents the interest payable on any borrowings such as bonds, loans, lines of credit, etc.

6. www.financestrategists.com › accounting › accountingInterest Coverage Ratio (ICR) | Formula, Calculation, Example

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   Mar 7, 2023 · Learn how to calculate the interest coverage ratio (ICR), a measure of a company's ability to pay its debts over time. See the formula, examples, and factors that affect the ICR.

   • Video Duration: 3 min

   • The interest coverage ratio (ICR) is a measure of a company's ability to pay its debts over time. It is calculated by dividing a company's earnings...
   • Factors that can affect a company's ICR include its level of debt, its earnings, and the rate of interest it pays on its debt.
   • There is no danger if a company has an ICR that is too high. In fact, a high ICR may be indicative of a strong company that is able to generate eno...
   • A low ICR can indicate that a company may have difficulty paying its debts over time. This may put the company at risk of defaulting on its loans o...
   • There are several ways a company can improve its ICR, including reducing its level of debt, increasing its earnings, and negotiating lower interest...

7. www.myaccountingcourse.com › financial-ratiosInterest Coverage Ratio | Formula | Example | Analysis

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   Learn how to calculate the interest coverage ratio, a liquidity ratio that shows how well a company can afford its interest payments. See an example of how to use EBIT and interest expense to compute the ratio and interpret the results.

8. www.investopedia.com › ask › answersInterest Coverage Ratio (ICR): What's Considered a Good Number?

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   Aug 14, 2023 · Learn how to calculate the interest coverage ratio, which measures a company's ability to pay its interest expenses with its earnings. Find out what a good ratio is and how it varies by industry and company.

9. www.investing.com › academy › analysisInterest Coverage Ratio: Calculation, Uses - Investing.com

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   May 16, 2024 · Calculating the Interest Coverage Ratio involves a straightforward formula: Interest Coverage Ratio (ICR) = Earnings Before Interest and Taxes (EBIT) / Interest Expense. Key...