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What is an interest coverage ratio?
short by / on Friday, 7 February, 2025
Interest coverage ratio (ICR) is a financial measurement showing how well a company can handle debt payments. It is calculated by dividing the company's earnings before interest and taxes (EBIT) by its interest expense. This ratio gives information about the company's financial well-being. Creditors and shareholders use this ratio differently since they have different interests and positions.