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Fundamental
Interest Coverage
EBIT or EBITDA / Interest Expense
Definition
Interest coverage measures ability to pay interest on debt. Ratio above 2-3x is generally comfortable. Low coverage increases default risk. Formula: EBIT / Interest Expense.
Related Topics
#debt service
#credit risk
#financial health
#leverage analysis
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Category: Fundamental
Fundamental analysis examines a company's financial health, management quality, and market position to determine intrinsic value.
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