Interest coverage
Interest coverage is a leverage and coverage metric, calculated as EBIT ÷ Interest expense.
- Layer
- Metric
- Defined in
- Metric definitions
- Nearby
- 15
Authority
This definition follows Non-GAAP financial measure — SEC Regulation G — it is not a GAAP measure, so a registrant publishing it has to reconcile it to the nearest GAAP figure.
Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.
Formula
EBIT ÷ Interest expense
Common covenant.
A metric without its definition is a number people argue about in meetings. Every metric component in this system requires one — see the rules.
Nearby in the catalog
No component names this concept outright. These are the ones in its part of the system, which is a weaker claim — but a component nothing links to is a component nobody finds.
7Dashboard & charts
Family spec- MetricDefinitionEvery metric requires one. Formula with values substituted.
- NonGaapReconciliationEBITDA below net income, every adjustment named.Spec
- MrrBridgeThe movement, not a single number with a percentage.Spec
- BudgetVsActualPolarity-aware, materiality-filtered, versions tracked.
- ForecastTableProjections dashed and labeled everywhere.
- CovenantMonitorThe contractual definition, not the generic one.Spec
- KpiHealthStripProvisional marking for pre-close numbers.Spec
- RevenueTrackerRevenue by stream, with mix, growth and concentration.
- ExpenseTrackerSpend by category on three bases. Polarity derived per row from the sign convention.
- DriverModelThe inputs a forecast is built from, and what they produce.
- ScenarioCompareScenarios side by side, all measured against the base.
- PlByDimensionThe P&L cut by department, entity or product.
Terms this one depends on
Also in Leverage & coverage
Work with this concept
The calculators that compute it and the ledger payloads that carry it. A definition is where a reader starts; these are where they go next.
- Loan amortisationLevel payment solved, then walked in minor units so the last payment clears the balance exactly.Tool
- Effective vs nominal rate12% compounded monthly is 12.68%. That difference is the covenant you either pass or fail.Tool
- Interest coverage calculatorInterest coverage is a leverage and coverage metric, calculated as EBIT ÷ Interest expense.Calculator
- Journal entry for a loan repaymentWhen the loan is received, debit Cash and credit Loan payable. Each payment debits Interest expense for the interest portion and Loan payable for the principal portion, and credits Cash for the full payment.Entry
Defined in Metric definitions. This page is generated from that document, so the two cannot disagree.