EBITDA Minus Capex Interest Coverage
Calculate the EBITDA minus capital expenditure interest coverage ratio, the number of times the EBITDA that is left after capital expenditure covers the interest expense.
Moody’s uses this coverage in its rating methodologies for capital-intensive sectors (such as automobile manufacturers), because EBITDA alone counts the cash needed to replace the assets as available for the lenders. A company whose (EBITDA - CapEx) coverage is far below its EBITDA coverage depends on its capital spending staying low, or on new borrowing, to keep paying its interest.
The formula is as follows:
\[(\text{EBITDA} - \text{CapEx}) \text{Interest Coverage} = (\text{Operating Income} + \text{Depreciation and Amortization} - | \text{Capital Expenditure} |) / \text{Interest Expense}\]Capital expenditure is reported as a negative cash outflow, so its magnitude is deducted. A zero interest expense gives NaN.
Also known as: (EBITDA - CapEx) / interest expense, EBITDA less capex coverage, EBITDA minus capex to interest.
EBITDA Minus Capex Interest Coverage in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_ebitda_minus_capex_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_minus_capex_interest_coverage_ratio()
Or, after setting up the Finance Toolkit MCP, ask:
How many times did EBITDA minus capital expenditure cover the interest expense of AT&T, Union Pacific and Hershey from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| HSY | 14.3466 | 15.1345 | 13.6806 | 15.7618 | 6.7126 |
| T | 4.0654 | -1.0086 | 3.8392 | 3.6439 | 3.6808 |
| UNP | 7.4417 | 6.7215 | 5.8164 | 6.8235 | 6.5034 |
Parameters
get_ebitda_minus_capex_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 |