What is Interest Coverage Ratio?
Interest coverage shows how easily a company can pay interest on its debt — a critical indicator of solvency for leveraged businesses.
Formula
Interest Coverage = EBIT ÷ Interest Expense
How to Interpret
Higher is safer. Below 1.5 means the company struggles to service its debt. Below 1.0 means it can't cover interest at all.
Typical Ranges
Above 3x is comfortable, above 5x is strong, below 1.5x is concerning.
Find Stocks Using This Metric
Use the Equiscale Stock Screener to filter Indian stocks by Interest Coverage Ratio.
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