Definition
The interest coverage ratio measures a company's ability to meet its interest payments with its earnings before interest and taxes (EBIT).
Related Services
Financial analysis and credit risk management services help businesses assess their interest coverage ratio to determine their ability to manage debt.
Problem and Application
A low interest coverage ratio may signal financial distress, making it crucial for businesses to maintain healthy ratios to secure favorable lending terms.
Conclusion
The interest coverage ratio is a critical indicator of financial health, helping businesses assess their ability to service debt and manage borrowing costs.
