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

Interest Coverage Formula

Interest Coverage = EBIT ÷ Interest Expense

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.

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