Interest Coverage Ratio

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Interest Coverage Ratio

Explanation: Interest Expense refers to the cost incurred by a company for borrowing funds or using debt capital. It represents the interest payments made by the company on its outstanding debt obligations, including loans, bonds, and other forms of borrowing. Interest expense is reported on the income statement and is deducted from the company’s operating income to calculate its net income.

Example: Coal India had an interest expense of 684.31 crore rupees as of FY23. This indicates the amount of money Coal India paid in interest on its outstanding debt during the fiscal year. Interest expense is an essential component of a company’s financial statements, reflecting its cost of financing and its obligations to creditors. Monitoring changes in interest expense over time helps investors assess the company’s borrowing costs, debt management practices, and overall financial health.

You can view the Interest Coverage Ratio for any company on Radar under Solvency Ratios in the Ratios section.

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