Terms Beginning With 'i'

Interest Cover

Interest Cover Ratio is the ratio showing the number of times interest payments are covered by earnings before interest and tax (EBIT). Interest coverage ratio informs how well the organisation is able to make payment of the interest on the remaining debt.

The higher the interest cover, the greater the company's ability to meet interest payments.

Interest Cover = Earnings Before Interest and Tax (EBIT) / Net Interest Payments

            = number of times covered.