TeachMeFinance.com - explain Interest coverage ratio
Interest coverage ratio The term 'Interest coverage ratio' as it applies to the area of energy can be defined as ' The number of times that fixed interest charges were earned. It indicates the margin of safety of interest on fixed debt. The times-interest-earned ratio is calculated using net income before and after income taxes; and the credits of interest charged to construction being treated as other income. The interest charges include interest on long-term debt, interest on debt of associated companies, and other interest expenses'.
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