See how comfortably a generic company’s income covers its interest payments.
$150,000
$30,000
5.0 times
divides income before interest expense and income taxes by interest expense: how many times over the company could have paid its interest out of this year's income.
A ratio near 1 means income barely covers interest, with nothing left for taxes or profit. A much higher ratio means interest payments are a comfortable, not a strained, obligation.