Categories
Resources for Accountants

Interest Coverage Ratio – Meaning, Formula, Calculation & Interpretations [Video]

Interest Coverage Ratio – Meaning, Formula, Calculation & Interpretations

This in-depth tutorial guides you through the most important aspects of the Interest Coverage Ratio. You will learn what Interest Coverage Ratio is, how to calculate it, and how to interpret the results. Using the Colgate Case Study, we will also understand how to compute the Interest Coverage Ratio in Excel.
You can download the Colgate Interest Coverage Ratio template from this link – https://www.wallstreetmojo.com/ratio-analysis-template/

What is Interest Coverage Ratio?
——————————————–
The interest coverage ratio helps determine how many times a company’s current earnings (before interest and taxes) can be used to pay interest on its outstanding debt. It can be used to determine a company’s liquidity position by assessing how easily it can pay interest on its outstanding debt.

Formula
——————————————–
Interest Coverage Ratio Formula = EBITDA / Interest Expense

Interpretation
——————————————–
– Higher interest coverage ratio indicates that the company is better able to pay off its debts.
– If interest coverage is less than 1, it means that EBITDA will not be sufficient to pay off the debt, thus, necessitating the search for alternative sources of funding.
– Since capital-intensive companies have higher depreciation and amortization, the interest coverage ratio should be calculated using EBITDA.

For more details, you can refer to our article – https://www.wallstreetmojo.com/interest-coverage-ratio/

Connect with us!
YouTube ► https://www.youtube.com/channel/UChlNXSK2tC9SJ2Fhhb2kOUw
LinkedIn ► https://www.linkedin.com/company/wallstreetmojo/mycompany/
Facebook ► https://www.facebook.com/wallstreetmojo
Instagram ► https://www.instagram.com/wallstreetmojoofficial/?utm_medium=copy_link
Twitter ► https://twitter.com/wallstreetmojo

Watch/Read More
  • Tags

Most Popular Posts Today

Negotiation Skills: How to Prepare for Successful Negotiations [Video]
►
Categories
Resources for Accountants

Negotiation Skills: How to Prepare for Successful Negotiations [Video]

Negotiating is a valuable skill that can help you achieve your goals in various aspects of life, from business deals to personal relationships. To excel in negotiations, it's crucial to be well-prepared. This guide will walk you through the steps to prepare effectively for successful negotiations.Get free business and management guides, tools, and worksheets at: https://www.bizmove.com

  • Tags

Most Popular This Week

P&L Presentation Type based on your Audience (Natural Account vs. Functional) [Video]
►
Categories
Resources for Accountants

P&L Presentation Type based on your Audience (Natural Account vs. Functional) [Video]

Before compiling the P&L, you need to decide on the type of presentation (based on your audience): Natural Account, Functional or Hybrid. Free P&L Template shown in video: https://thefincontroller.com/p/types-of-incomestatemet-presentation Enroll in the FP&A Academy: https://controller-academy.com/courses/fpa-academy Time Stamps: 00:00 Intro 01:28 Company Profile 02:17 1. Natural Account P&L 04:26 2. Functional P&L 05:38 3. Hybrid P&L 09:08 How To Setup in NetSuite 10:29 How To Setup in QuickBooks Online ----------------------------------- Hang Out with me on social media: 📸 https://www.instagram.com/the_financial_controller/ 📱https://www.tiktok.com/@thefinancialcontroller https://www.linkedin.com/in/bill-hanna-cpa-7653a851/ DISCLAIMER: Links included in this description might be affiliate links. If you happen to purchase a product or service with the links that I provide I may receive a small commission. There is no additional charge to you! Thank you for supporting my channel so I can continue to provide you with free content each week! All views expressed on my channel are mine alone. Not intended as financial or professional advice

Entrepreneurship Mistakes from Hell | How to Start a Startup [Video]
►
Categories
Resources for Accountants

Entrepreneurship Mistakes from Hell | How to Start a Startup [Video]

Embarking on the journey of entrepreneurship is akin to riding a roller coaster blindfolded—it's exhilarating, unpredictable, and fraught with potential pitfalls. While mistakes are an inevitable part of the entrepreneurial journey, some are more catastrophic than others. These "mistakes from hell" can derail even the most promising ventures, leaving entrepreneurs reeling and searching for ways to recover. Let's explore some of these missteps that have the potential to turn an entrepreneurial dream into a nightmare.