What is Times Interest Earned (Interest Coverage) Ratio?

I would be grateful if someone could help me with this question. It is important to know about Times Interest Earned.
Add a comment

8 replies

"A ratio used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) of one period by the company's interest expenses of the same period: interest coverage ratio = EBIT/Interest expense"
Add a comment
"The lower the particular rate, the more the business is actually mired by financial debt expense. When a firm's pastime insurance coverage proportion will be one.5 or perhaps lower, being able to satisfy fascination charges might be questionable. An interest reporting ratio below 1 suggests the company is just not generating sufficient revenues to meet up with awareness expenditures. "
Add a comment