Hence they demand a higher interest coverage ratio before they give out their money. Ability To Take On More Credit: This is a corollary of the fact that high interest coverage ratio means the company is solvent. Lenders want to lend money to people who are solvent. This ensures that they...
Interest Coverage Ratio is used to determine the ability of a company or business to pay off the interest on the outstanding debt. The values can be obtained by dividing EBIT with interest expenses during that period.
The financing arrangements will allow KCRC to maintain a minimum Debt Service Coverage ratio of 1.25 and a maximum debt to equity ratio of 43%. 有关的融资安排可让九铁公司把最低偿债备付率维持在1.25倍,而最高的债务与资本比率则维持在43%。 Debt Service Coverage Ratio means trailing four quarters...
Companies should keep interest expenses manageable by maintaining a stable interest coverage ratio (i.e., the ratio of EBIT to interest expense). A higher interest coverage ratio means a company can better cover its interest expenses. Meanwhile, tax expenses might come from: Income taxes (sometime...
Interest Coverage Ratio=EBITInterest Expense *EBIT = Earnings Before Interest and Taxes So the lower the ratio is, the more the company is burdened by its debt expenses. This in turn means that they have less capital that can be used in other ways. ...
A ratio of a company'sEBITto its totalexpensesfrominterestpayments. The interest coverage ratio measures the company's ability to make interest payments, such as in itsdebt service. A ratio above one indicates that the company is able to pay its interest, while a ratio below one means that ...
Interest Coverage Ratio means, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for such period. Fixed Charge Coverage Ratio means, with respect to any Person for any period, the ratio of EBITDA of such Person for such period to the...
In most cases, investors and analysts will look for interest coverage ratios of at least three, which indicate that the business’s revenues are reliable and consistent. On the other hand, a “bad” interest coverage ratio is any number less than one, because this means that your business’...
What the Ratio Means for Investors When a company struggles with its obligations, it may borrow or dip into its cash reserve, a source forcapital assetinvestment, or required for emergencies. Analyzing interest coverage ratios over time will often give a clearer picture of a company’s position...
A higher interest coverage ratio is usually desirable because it means a company can better fulfill its financial obligations. But, this isn't always a hard-and-fast rule because this metric can be fluid. Higher ratios are better for companies and industries that are susceptible to volatility. ...