Interest Expense

Explanation: The Interest Coverage Ratio measures a company’s ability to meet its interest obligations on outstanding debt. It is calculated by dividing the company’s earnings before interest and taxes (EBIT) by its interest expense. The ratio indicates how many times a company’s operating income can cover its interest expenses. A higher interest coverage ratio suggests a stronger ability to meet interest payments and indicates lower financial risk, while a lower ratio may indicate potential difficulties in servicing debt.

Example: Coal India has an interest coverage ratio of 56.53 as of FY23. This means that Coal India’s earnings before interest and taxes (EBIT) are 56.53 times greater than its interest expense. A high interest coverage ratio indicates that Coal India generates significant earnings relative to its interest obligations, suggesting a strong ability to meet its debt payments. Investors and creditors often use the interest coverage ratio to assess a company’s financial stability and ability to manage its debt effectively.

You can view the quarterly or annual Interest Expense for any company on Radar under the Quarterly Results or Yearly P/L sections.