Interest Coverage Ratio
Also called: times interest earned, EBIT coverage
Interest coverage divides operating income by interest expense, showing how many times over a company can pay its interest bill. Below roughly 1.5 is distress territory, and lenders write it into covenants precisely because it deteriorates before a default rather than after. It's more informative than debt-to-equity because it compares an obligation to the cash flow that services it.
Formula
Interest coverage = EBIT ÷ Interest expense
Where this is taught
Definitions are the trailer. These free levels turn Interest Coverage Ratio into something you play — one bite-size lesson, with worked examples, a quiz and XP.