Enter the earning before interest and tax and the total interest expense into the calculator. The calculator will evaluate and display the interest coverage ratio.

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## Interest Coverage Ratio Formula

The following equation can be used to calculate the interest coverage ratio of a business.

ICR = EBIT / IE

- Where ICR is the interest coverage ratio
- EBIT is the earnings before tax and interst
- IE is the total interest expense

## Interest Coverage Ratio Definition

The interest coverage ratio is a financial metric used to analyze businesses. It’s the number of times a company could pay the interest payments with it’s earnings.

## Interest Coverage Ratio Example

How to calculate an interest coverage ratio?

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

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

**Finally, calculate the interest coverage ratio.**Use the equation above to calculate the interest coverage ratio.

## FAQ

**What is an interest coverage ratio?**

An interest coverage ratio is a ratio of the total EBIT to total interest expenses of a company or business.

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