Finance CalculatorsBusiness FinanceFree Tool
Interest Coverage Ratio
Calculate your interest coverage ratio - EBIT divided by interest expense - to check how comfortably operating profit covers interest payments.
How to Use Interest Coverage Ratio
- 1Enter your EBIT
- 2Enter your interest expense
- 3Click Calculate to see your interest coverage ratio
Frequently Asked Questions
ICR = EBIT divided by Interest Expense. Unlike DSCR, this only considers interest - it does not add principal repayment into the denominator.
This calculator flags 3.0x or above as comfortable, 1.5x or above as borderline, and below 1.5x as a high risk of default - many lenders look for ICR of at least 1.5-2.0x before extending credit.
Interest Coverage Ratio only measures against interest expense. The Debt Service Coverage Ratio calculator is stricter, adding principal repayment to the denominator as well - DSCR is generally the more complete measure of debt-servicing ability when principal is also due.
Enter your own EBIT figure from your financial statements, or use the EBIT Calculator on this site first if you need to derive it from Revenue, COGS, and Operating Expenses.
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