Interest Coverage Ratio (ICR) Calculator
Calculate the Interest Coverage Ratio using EBIT or EBITDA. Evaluate corporate debt servicing capacity with period annualization and short-term debt analysis.
Interest Coverage Ratio (ICR)
Calculate your company's margin of safety for paying interest
Company Scenarios
Interest Coverage Ratio
Healthy
3.0x
| EBIT Output | $0 |
| Interest Expense | $0 |
Interest Buffer Health
1.0x (Default Zone)
5.0x+ (Fortress)
How to Use Interest Coverage Ratio (ICR) Calculator in 3 Easy Steps
1
Step 1
Enter EBIT and total interest expense for the reporting period.
2
Step 2
Optionally toggle EBITDA mode and include short-term debt interest.
3
Step 3
View the ICR ratio with risk assessment and annualized projections.
Frequently Asked Questions
Most bank loan covenants require a minimum ICR between 2.0x and 3.0x, depending on the industry, loan size, and borrower's credit profile. Some SBA loans require as low as 1.25x.
Yes. If EBIT is negative (operating loss), the ICR will be negative, indicating the company is losing money from operations before even considering interest payments — a very concerning signal.
Use EBIT for a more conservative measure. Use EBITDA for capital-intensive businesses where depreciation is a significant non-cash charge. Many analysts calculate both for comparison.
The Debt Service Coverage Ratio (DSCR) includes both interest AND principal repayments in the denominator, making it a stricter measure than ICR which only considers interest payments.