Sunday, 8 November 2026 Weekly snapshot · Not investment advice standard-equity.report
Balance Sheet
Interest Coverage (EBIT/Interest)
Operating profit divided by interest expense.
Definition
Interest coverage measures how comfortably the company's operating profit covers its interest payments. A ratio of 5x means operating profit is 5x the interest bill.
Formula
Operating Profit (EBIT) ÷ Interest Expense
Why it matters
Interest coverage is the most-watched credit metric for non-financial companies. Below 3x is considered weak; below 1.5x is distress. Sustained strong interest coverage is what allows a company to maintain investment-grade credit ratings.
How Standard Equity uses it
Checked in the SE Grade's quality pillar (EBIT ÷ interest expense) when a company pays interest. Not used for banks, insurers or broker-dealers.
The metric
| Category | Balance Sheet |
|---|---|
| Unit | x |