Interest Coverage Ratio Calculator
Calculate your interest coverage ratio instantly. Enter EBIT and interest expense to see your ICR, debt-safety rating, and sector benchmarks. Free, no sign-up required.
Operating profit before interest and tax expenses. Found on the income statement.
Total interest paid on all debt obligations during the period.
Select your sector to compare against typical benchmarks. Different industries have different acceptable ICR ranges.
📊 Interest Coverage Ratio
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EBIT
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Interest
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Coverage
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📌 ICR Rating Scale & Sector Benchmark
💡 What this means
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📚 Master financial ratios
📚 See top-rated corporate finance books on Amazon →📝 How to use this interest coverage ratio calculator
- Enter EBIT — your earnings before interest and taxes, found on the income statement. This is your operating profit.
- Enter Interest Expense — the total interest paid on all debt during the period (loans, bonds, credit lines).
- Select your sector (optional) — to compare your ICR against typical industry benchmarks, since acceptable ratios vary by sector.
- Click Calculate — see your ICR, a safety rating, a benchmark comparison table, and a plain-English interpretation instantly.
📌 5 tips for interpreting your interest coverage ratio
- ✓ Watch the trend, not just the snapshot. A declining ICR over 3+ quarters is a bigger red flag than a single low reading. Track ICR quarterly to see if debt-service ability is improving or deteriorating.
- ✓ Use EBITDA for a more conservative measure. ICR based on EBITDA (adding back depreciation/amortization) gives a higher ratio, showing the true cash available for interest. Some lenders require both EBIT and EBITDA versions.
- ✓ Compare within your sector. A 2.5 ICR may be healthy for a utility but alarming for a tech company. Always benchmark against peers, not generic thresholds. Use the sector selector above.
- ✓ Factor in variable-rate debt. If interest rates rise, your interest expense increases while EBIT stays flat. Stress-test your ICR at 2% higher rates to see if you still clear the 1.5 safety line.
- ✓ ICR below 1.0 means distress. If EBIT does not even cover interest, the company is burning cash to service debt. This is a critical warning sign — consider restructuring, refinancing, or raising equity before the situation worsens.
Disclaimer: This calculator provides interest coverage ratio estimates for educational and analysis purposes only. Actual financial assessments should consider additional ratios (DSCR, current ratio, quick ratio), cash flow patterns, debt covenants, and forward-looking projections. Consult a financial advisor or accountant for professional guidance.
Related Tools
Interest coverage is one piece of your financial health picture. These seven calculators cover the rest — from debt service and working capital to break-even analysis, ROI, and return on equity.
- Debt-to-Income Ratio Calculator — the personal-finance companion to ICR, measuring your income against all debt obligations.
- Working Capital Calculator — measure your short-term liquidity (current assets minus current liabilities) alongside your ICR for a fuller solvency picture.
- Break-Even Calculator — find the revenue level where your operating profit covers all fixed costs, the minimum threshold before ICR turns positive.
- ROI Calculator — measure the return on investment for capital projects, useful when deciding whether to take on new debt that would affect your ICR.
- Cash Flow Calculator — project your operating cash flow, the actual cash available to service debt interest beyond the accounting EBIT figure.
- Debt Payoff Calculator — plan a strategy to reduce your debt load and improve your interest coverage ratio over time.
- ROE Calculator — measure return on equity via the DuPont 3-factor model to see how leverage, margin, and asset turnover interact with your interest coverage.