Ratio

Interest Coverage Ratio Usual Amounts: A Guide to Forex Trading

5 min read

The interest coverage ratio is a useful tool for investors to get a general idea of the financial health of the company. It is the ratio of a company’s operating income to its interest payments. Ideally, the interest coverage ratio should be above 1, as it indicates that a company’s income is enough to meet its debt payments obligations. Generally, an interest coverage ratio of above 5 is considered good. However, ratios above 3 are considered acceptable, emphasizing that a company has enough funds to comfortably cover its interest payments. The interest coverage ratio can differ among different industries and countries and also among different types of investors. In the forex market, a company’s interest coverage ratio can help investors gain better insight into how the company is likely to perform in different market cycles.