Interest Coverage Ratio helps the Investors and other stakeholders to understand the solvency position of the company.
Generally due to business requirements, companies may raise huge Debt as part of its operations.
Having huge Debt on the Balance Sheet also means corresponding Interest burden on the Income Statement This is where Interest Coverage Ratio comes into play.
It helps in identifying if the company earns sufficient profits so as to pay its Interest Expenses.
It tries to build a relationship between Interest Expense and Earnings Before Interest and Taxes(EBIT).
More on this topic has already been explained in Interest Coverage Ratio formula and interpretation.
- This template helps in calculating the Interest Coverage Ratio quickly.
- The file already has the Balance Sheet and Income Statement as a base information to calculate the ratio.
- You can simply use the financials of any company.
- The main calculation sheet picks the value from respective Income Statement and Balance Sheet and calculate the ratio for you.