How to calculate Interest Coverage Ratio

Formula

Interest coverage = EBIT ÷ interest expense

SQL query

This example assumes: income_statements(period date, ebit numeric, interest_expense numeric). It is written in PostgreSQL syntax; date functions differ slightly in MySQL, BigQuery and SQLite, and your column names will differ from these.

SELECT period,
       ebit,
       interest_expense,
       ebit / NULLIF(interest_expense, 0) AS interest_coverage
FROM income_statements
ORDER BY period;

Common mistakes that make Interest Coverage Ratio wrong

• With no interest expense the ratio is undefined; report it as not applicable rather than infinite.
• EBIT and operating income are close but not always identical; keep to one source.
• Quarterly figures are volatile for seasonal businesses; compare a trailing twelve months.

Ask for Interest Coverage Ratio in plain English

Instead of writing the query yourself, you can type the question. SchemaChat turns it into SQL against your connected database or uploaded file, runs it, and shows the SQL and the figures it used so you can check the answer before you share it. It does not replace your judgement about the definition: check that the query matches the formula your business uses.

• What was our interest coverage ratio for each quarter?
• In which quarters did EBIT fall below twice interest expense?