Measures ability to pay interest from earnings.
EBIT — Business metric. Affects cost, margin, or break-even; validate against recent data. Example: 0.1.
EBIT is required
interest expense — Operating expenses. Excludes financing and taxes to isolate operational performance. Example: 0.101.
interest expense is required
Measures ability to pay interest from earnings.
Formula
interestCoverage = ebit ÷ interestExpense