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

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## 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?

**First, determine the EBIT.**Calculate the earnings before interest and tax.

**Next, determine the non-cash expenses.**Measure the total non-cash expenses.

**Next, determine the interest expense.**Calculate the total interest expense.

**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.