what is interest coverage ratio
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Times interest earned or interest coverage ratio is a measure of a company's ability to honor its debt payments. It may be calculated as either EBIT or EBITDA divided by the total interest expense.
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The interest coverage ratio measures how many times a company can cover its current interest payment with its available earnings. ... The ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by the company's interest expenses for the same period.
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