Interest Cover Ratio Calculator
Interest Cover Ratio Calculator Explained: Explained:
a) What is this? A business that has an interest coverage of 1.5 or lower will typically find it difficult to meet its interest obligations. An interest coverage of below 1.0 indicates the company can't satisfy its interest expenses.
b) What does this tell me? The stock density calculators tells you whether you have around the right amount of money invested in stock. For a typical communty pharmacy for example, the investment should be approximately $1,000 per metre.
c) Why should I use it? To understand whether your business is in financial difficulty or not.
(d) Caution: Profit can vary and as a result so can this number. Assessing the EBIT result on a very short time scale can be erroneous because EBIT isn't consistent for most businesses across a year. Talk to financial professionals if the interest cover falls below 1.5. And your bank. You use the calculator at your own risk.