Interest Coverage Ratio Calculator

Leverage & Debt

Updated Apr 2026 • Has calculator

How many times a company's operating profit covers its interest expense.

Calculate Interest Coverage

EBIT (Operating Income)

Earnings before interest and taxes in millions of USD

Interest Expense

Annual interest expense in millions of USD

Interest Coverage Ratio

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Not investment advice.

What is Interest Coverage?

The Interest Coverage Ratio (also called Times Interest Earned) divides EBIT (operating income) by interest expense to show how comfortably a company can service its debt from operating profits. A ratio of 3.0 means the company earns three dollars of operating profit for every dollar of interest due. Higher is safer; a ratio below 1.5 signals potential difficulty meeting interest payments, especially if earnings fall. Lenders and credit analysts use this ratio to assess default risk.

Formula

Interest Coverage = EBIT ÷ Interest Expense

Worked Example

FY2024

Step 1 EBIT (operating income) FY2024: $123,216M

Step 2 Interest expense FY2024: $3,932M

Step 3 Interest Coverage = $123,216M ÷ $3,932M = 31.34x

Step 4 → Apple's operating profit covers its interest obligations more than 31 times over

Source: Apple 10-K FY2024 (2024-11-01)

How to Interpret Interest Coverage

< 1.5

Danger Zone — barely covering interest, high default risk

1.5 – 3

Adequate — covering obligations but limited margin

3 – 10

Healthy — comfortable debt service capacity

> 10

Very Strong — minimal debt risk relative to earnings

📚 Leverage & Liquidity — Complete the path

Sources