Enter the EBIT, non-cash expenses, and interest expense into the calculator to determine the cash coverage ratio.

## Cash Coverage Ratio Formula

The following formula is used to calculate the cash coverage ratio.

CCR = ( EBIT – NCE ) / IE

• Where CCR is the cash coverage ratio
• EBIT is the earnings before tax and interest
• NCE is the non-cash expenses
• IE is the interest expense

## Cash Coverage Ratio Defintion

A cash coverage ratio is a measure of the total cash that is available to pay off interest from debt.

## Cash Coverage Ratio Example

How to calculate cash coverage ratio?

1. First, determine the EBIT.

Calculate the earnings before interest and tax.

2. Next, determine the non-cash expenses.

Measure the total non-cash expenses.

3. Next, determine the interest expense.

Calculate the total interest expense.

4. Finally, calculate the cash coverage ratio.

Calculate the cash coverage ratio using the equation above.

## FAQ

What is a cash coverage ratio?

A cash coverage ratio is a measure of the available cash to pay for interest expense. The higher the ratio the larger the amount of cash to interest expense.