Posted inAll sectors / Finance & Control / Financial

Interest coverage ratio

Definition of this KPI:
The Interest Coverage Ratio, also known as the Times Interest Earned Ratio, is a financial metric that assesses a company's ability to meet its interest payments on debt obligations. It measures the company's capacity to cover its interest expenses from its operating income or earnings before interest and taxes (EBIT).

  • This KPI can be calculated as: EBIT / Interest expence
  • The KPI will be measured as: ratio (number)
  • How to interpret the KPI: higher is better
  • The strategic objective to measure with this KPI: Financial stability
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