Term of the Day - interest coverage ratio
For Thursday, January 8, 2009
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Term of the Day - interest coverage ratio
A calculation of a company's ability to meet its interest payments on outstanding debt. Interest coverage ratio 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 ratio, the larger the debt burden is on the company. also called interest coverage.
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