# Interest Coverage Ratio Calculator

Interest Coverage Ratio Calculator is a tool used to calculate a firm’s ability to afford the interest on the debt

Interest Coverage Ratio:
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Background Information

What does Interest Coverage Ratio mean?
The interest coverage ratio measures a firm’s ability to make interest payments on its debt in a timely way.
Formula
Interest Coverage Ratio = EBIT / Interest Expense
Example

A company has earnings before interest and taxes $50,000 the interest and taxes are$15,000 and \$5,000 respectively. According to the above formula, the Interest Coverage Ratio is 3.33.