Leverage

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.

Analyze Interest Coverage Ratio by Indian Market Sector

See how interest coverage ratio varies across major Indian (NSE/BSE) market sectors. US sector benchmarks are summarised in the Typical Ranges section above.

Banking & Financial Services Information Technology Pharmaceuticals & Healthcare FMCG (Fast-Moving Consumer Goods)Automobile & Auto Components Energy & Oil & Gas Infrastructure & Construction Real Estate Telecom Metals & Mining Chemicals & Specialty Chemicals Insurance

Learn More in the Academy

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Leverage RatiosAccounting

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Leverage RatiosFundamental Analysis

Find Stocks Using This Metric

Use the Equiscale Stock Screener to filter US or Indian stocks by Interest Coverage Ratio.

US Stock Screener →Indian Stock Screener →