Interest Coverage Ratio
Can the company comfortably pay its interest expenses?
Definition
Interest Coverage measures how many times a company's operating profit covers its interest obligations. It is a direct test of debt serviceability.
Formula
Finsco uses Non-Operating Interest Expense as primary, falling back to Total Other Finance Costs if the primary field is zero.
Interpretation
| Range | Assessment |
|---|---|
| > 5.0 | Very safe — ample margin for debt service |
| 3.0 – 5.0 | Comfortable — adequate coverage |
| 1.5 – 3.0 | Tight — limited buffer for earnings decline |
| < 1.5 | Danger zone — may struggle to meet interest payments |
Industry Routing
Only available for Industrial companies. Banking and Insurance have different interest structures.
In Finsco
Computed by the audit debt-discipline command.