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

## 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 interest
• 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 its earnings.

## Interest Coverage Ratio Example

How to calculate an interest coverage ratio?

1. First, determine the EBIT.

Calculate the total earnings before tax and interest.

2. Next, determine the total interest expense.

Calculate the interest expense.

3. 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 the total interest expenses of a company or business.