The interest coverage ratio is an indicator of a company's ability to repay interest on its debt.

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The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expense. A higher ratio indicates that a company has enough earnings to cover its interest payments, which implies that it is less risky for lenders to lend money to the company. Conversely, a low interest coverage ratio may suggest that a company is at greater risk of defaulting on its debt payments.

The Interest Coverage Ratio Is an Indicator of a Company's