interest coverage

Definition

A calculation of a company's ability to meet its interest payments on outstanding debt. Interest coverage is equal to earnings before interest and taxes for a time period, often one year, divided by interest expenses for the same time period. The lower the interest coverage, the larger the debt burden is on the company.

Use interest coverage in a sentence

You should try to make sure that you have enough interest coverage for the things that you need to do.

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They had a lot of interest coverage and I was happy with that and I knew everything was going to be okay.

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After figuring our interest coverage we managed to construct a budget for the company that we felt was the best we could manage considering what we had to work with.

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interest coverage ratio coverage