EBITDA Interest Coverage
Calculate the EBITDA interest coverage ratio, the number of times the earnings before interest, taxes, depreciation and amortization cover the interest expense.
EBITDA to interest is one of the supplementary ratios of S&P Global Ratings and a coverage measure in many of Moody’s rating methodologies. It is higher than the EBIT interest coverage (get_interest_coverage_ratio) by the depreciation and amortization, which makes it the usual measure in loan covenants, but it ignores that the assets have to be replaced, so for capital-intensive companies the (EBITDA - CapEx) coverage (get_ebitda_minus_capex_interest_coverage_ratio) is the stricter test.
The formula is as follows:
\[\text{EBITDA Interest Coverage} = (\text{Operating Income} + \text{Depreciation and Amortization}) / \text{Interest Expense}\]The interest expense is the gross expense, as S&P Global Ratings does not net the interest income. A zero interest expense gives NaN, which is often a gap in the reported data rather than an absence of debt.
Also known as: EBITDA to interest, EBITDA coverage, EBITDA/interest, EBITDA interest cover.
EBITDA Interest Coverage in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_ebitda_interest_coverage_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["T", "UNP", "HSY"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_ebitda_interest_coverage_ratio()
Or, after setting up the Finance Toolkit MCP, ask:
How many times did the EBITDA of AT&T, Union Pacific and Hershey cover their interest expense from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| HSY | 18.1655 | 18.8425 | 18.455 | 19.2379 | 9.2591 |
| T | 6.5336 | 2.1883 | 6.507 | 6.648 | 6.744 |
| UNP | 9.9793 | 9.5696 | 8.5075 | 9.5437 | 9.3995 |
Parameters
get_ebitda_interest_coverage_ratio accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (income and cash flow statement items) over. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows. | 4 |