Interest Coverage Ratio | Practical Law

Interest Coverage Ratio | Practical Law

Interest Coverage Ratio

Interest Coverage Ratio

Practical Law Glossary Item 3-382-3550 (Approx. 2 pages)

Glossary

Interest Coverage Ratio

The ratio of EBITDA to interest payments due on debt for borrowed money. This financial ratio measures the company's ability to satisfy its interest payments as they become due. Higher ratios (greater than 1:1) are preferable and indicate the company is better able to satisfy such debts.