Tag: Interest Cover Ratio

Interest Cover Ratio (ICR) is a helpful financial metric used to analyze a company’s ability to pay the interest on its debt. It is calculated by dividing the company’s earnings before interest and tax (EBIT) by its total interest payments. Companies with higher ICRs are in a better financial position as they can more easily cover the cost of interest payments. ICR provides investors with a clear insight on a company’s liquidity and solvency and helps them assess the financial health of a business. A high ICR indicates a healthy business while a low ICR indicates it is struggling financially. Investing in such companies can risky, hence investors should pay close attention to ICR before investing.

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Understanding “interest cover ratio” in Forex Trading

Post Author By Matthew M. Lockett
Post Date August 18, 2023

4 min read

The Interest Cover Ratio is a measure of a company’s ability to cover its interest expenses with its operating profits. It is calculated by dividing the company’s operating income by their interest expense. This ratio is especially important for companies that make use of debt to finance their operations because higher ratios indicate that the company may have less of a risk of defaulting on its debt obligations. In the Forex market, the Interest Cover Ratio is used as an indicator of a country’s currency strength as the ratio can affect the ability of a country to meet its debt obligations and pay sufficient interest to bondholders.