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The Interest Coverage Ratio is a debt ratio as it tracks the business capacity to fulfill the interest portion of its financial commitments.
Interest coverage ratio interpretation. Für den Vergleich zwischen Unternehmen wird die Interest Coverage Ratio eher weniger verwendet. Das mögliche Risiko einer Investition kann durch den Zinsdeckungsgrad ziemlich genau eingeschätzt werden. It helps companies determine how easily they can pay interest on outstanding debt or debt they plan to take on.
An interest coverage ratio explains a companys ability to earn profits to make interest payments on its borrowings. This is to ensure that a REIT is well-capitalized and its interest expenses in check. Interest Coverage Ratio Interpretation.
The interest coverage ratio is a measure of the number of times a company could make the interest payments on its debt with its EBIT. In simple words the interest coverage ratio is a metric that enables to determine how efficiently a firm can pay off its share of interest expenses on debt. Thus if the interest coverage ratio is 3 then the firm has 3 rupees in profit for every 1 rupee in interest obligations.
The interest coverage ratio is calculated by dividing earnings before interest and taxes EBIT by the total amount of interest expense on all of the companys outstanding debts. The interest coverage ratio measures the number of times a company can make interest payments on its debt before interest and taxes EBIT. The interest coverage ratio ICR also called the times interest earned evaluates the number of times a company is able to pay the interest expenses on its debt with its operating income.
The interest coverage ratio is both a debt ratio and a profitability ratio. This ratio is also known as times interest earned. The less likely the risk a REIT will screw up its debt repayment.
Therefore the higher the ratio the better it is. The interest coverage ratio measures the ability of a company to pay the interest on its outstanding debt. Stattdessen ist der Aussagegehalt für ein einzelnes Unternehmen sehr hoch.
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