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Definition
The interest cover ratio is operating profit (or EBIT) divided by interest expense. It shows how many times over the company's profit could cover the interest it owes — a key gauge of debt affordability.
In plain terms
Cover of 4 means profit is four times the interest bill: comfortable. Cover near 1 means almost all profit goes on interest, leaving no cushion.
Why it matters for your company
Lenders use interest cover, alongside debt service cover, to judge how much borrowing you can carry. See how lenders assess affordability.
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