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Interest coverage ratio (ICR) calculator

The interest coverage ratio — EBIT ÷ interest expense — shows how comfortably operating profit covers interest on debt. Analysts often use an EBITDA variant that adds depreciation and amortisation back, giving a cash-flow-based view of the same cushion. Values under 1.5 are generally seen as risky.

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The Interest coverage ratio (ICR) calculator turns Method, EBIT (operating profit), Depreciation & amortisation (EBITDA mode), Interest expense into Interest coverage (×), Earnings used (EBIT or EBITDA), Reading, instantly and for free. For instance, with Method = EBIT, EBIT (operating profit) = $500,000.00, Depreciation & amortisation (EBITDA mode) = $80,000.00 and Interest expense = $50,000.00 it returns Interest coverage (×) = 10, Earnings used (EBIT or EBITDA) = $500,000.00 and Reading = comfortable.

How to use it

  1. Enter your values: Method, EBIT (operating profit), Depreciation & amortisation (EBITDA mode), Interest expense.
  2. Read the result instantly: Interest coverage (×), Earnings used (EBIT or EBITDA), Reading.

Frequently asked questions

How does the Interest coverage ratio (ICR) calculator work?

It takes Method, EBIT (operating profit), Depreciation & amortisation (EBITDA mode) and Interest expense and derives Interest coverage (×), Earnings used (EBIT or EBITDA) and Reading from them. The calculation is live as you type, so the result updates on every change.

Which values does the calculator ask for?

4 values: Method, EBIT (operating profit) ($), Depreciation & amortisation (EBITDA mode) ($) and Interest expense ($). Nothing else is required — no account, no file upload.

What does a typical calculation look like?

With Method = EBIT, EBIT (operating profit) = $500,000.00, Depreciation & amortisation (EBITDA mode) = $80,000.00 and Interest expense = $50,000.00, the calculator returns Interest coverage (×) = 10, Earnings used (EBIT or EBITDA) = $500,000.00 and Reading = comfortable. Those figures come from running this exact tool, so you can reproduce them by entering the same values.

How much does the result change with different inputs?

It moves a lot. Using Method = EBITDA (add D&A), EBIT (operating profit) = $1,000,000.00, Depreciation & amortisation (EBITDA mode) = $160,000.00 and Interest expense = $55,000.00 instead, Interest coverage (×) goes from 10 to 21.091 — which is why it is worth testing a few scenarios rather than trusting a single figure.

Which “Method” option should I choose?

You can pick between « EBIT » and « EBITDA (add D&A) ». Each one changes what the calculator works out, so switch and compare — the default is « EBIT ».

What does it give for smaller values?

Scaled down to Method = EBIT, EBIT (operating profit) = $250,000.00, Depreciation & amortisation (EBITDA mode) = $40,000.00 and Interest expense = $45,000.00, Interest coverage (×) comes out at 5.556. The relationship is worth checking at both ends before you rely on a single result.

When would I actually use this?

Running the week: issuing an invoice or a quote, knowing what is in stock and what to reorder, and seeing whether cash covers what is due.

What is the most common mistake?

Reading profit as cash. A profitable month with sixty-day payment terms can still leave the account empty — the two numbers answer different questions.

What is the difference between the Interest coverage ratio (ICR) calculator and the Debt service coverage ratio (DSCR) calculator?

This one returns Interest coverage (×) and Earnings used (EBIT or EBITDA); the Debt service coverage ratio (DSCR) calculator returns DSCR (×) and Debt service supported at 1.25×. That is the whole difference — open the one whose figure you need.

Is there a tool for the next step?

Fixed charge coverage ratio (FCCR) calculator is the closest one after this: The fixed charge coverage ratio widens interest coverage to include lease and other fixed charges: (EBIT + fixed charges) ÷ (fixed charges + interest). Switch to EBITDA mode to add back depreciation and amortisation, and add principal repayments grossed up by the tax rate when a loan covenant defines FCCR that way. Lenders often require at least 1.25.

Further reading

All guides →
ComparisonInterest Coverage and the Ratios a Lender Actually TestsA loan agreement's covenants are the ratios that can put a solvent, profitable company into default. Interest coverage, times interest earned and DSCR are not three measures — and the one that adds principal repayment is the one that bites.ExplainerFixed-Charge Cover: the Ratio a Landlord or a Lender Looks AtThe same company, the same year, reads 1.02×, 1.52× or 2.56× depending on where rent is put and whether principal is grossed up for tax. Two of those pass a 1.25 covenant and one does not.ComparisonCurrent Ratio vs Quick Ratio, and What Neither Tells YouThe quick ratio removes inventory because inventory is the current asset that may not convert. Two companies with an identical current ratio can be five times apart on the quick ratio — and both measures are still blind to the one thing that actually stops a company paying: timing.GuideBorrowing for the Business: What the Bank Looks At Before the RateThe coverage ratio is the gate, the guarantee is the second price and the rate is an output. On a 400,000 loan, cutting the rate by a full point moves the coverage ratio by 0.018 — while two extra years of term move it by 0.216. The whole negotiation is in the wrong place.ExplainerReturn on Assets: What the Ratio Says About a Business, and What It HidesReturn on assets, return on net assets and return on capital employed are one family with two moving parts. On the same balance sheet they read 8.3%, 10.2% and 15.6% — and the two steps between them are exactly the two decisions you are making.ExplainerDebt-to-Equity Ratio Explained: Formula and Healthy LevelsThe debt-to-equity ratio measures leverage. Learn the formula, what a healthy level looks like, and how the personal version differs from the company one.