Interest Burden Ratio
Compute the Interest Burden Ratio, the component of the extended (five-step) DuPont decomposition that isolates the drag interest expense places on a company’s operating profit.
The Interest Burden Ratio is calculated by dividing earnings before tax (EBT) by earnings before interest and taxes (EBIT, proxied here by Operating Income). It expresses the share of operating profit that survives interest expense, so it sits between 0 and 1 for a company with debt: a value close to 1 means interest barely dents operating profit, while a low value signals a heavy interest load. Values slightly above 1 occur when non-operating income (e.g. interest income) exceeds interest expense.
Note that this is related to, but not the same as, the Interest Coverage Ratio (get_interest_coverage_ratio), which divides EBIT by interest expense and is unbounded above. When income before tax is roughly operating income minus interest expense, the interest burden is about 1 minus the reciprocal of the interest coverage ratio.
The formula is as follows:
\[\text{Interest Burden Ratio} = \text{Income Before Tax} / \text{Operating Income}\]Also known as: EBT to EBIT ratio, interest burden.
Interest Burden Ratio in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_interest_burden_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["CHTR", "TMUS", "DIS"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_interest_burden_ratio()
Or, after setting up the Finance Toolkit MCP, ask:
How much of their operating income did Charter Communications, T-Mobile US and Disney keep after interest from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| CHTR | 0.5885 | 0.6095 | 0.5481 | 0.5664 | 0.5589 |
| DIS | 0.6999 | 0.7806 | 0.5304 | 0.6353 | 0.8678 |
| TMUS | 0.4862 | 0.4808 | 0.771 | 0.8169 | 0.7619 |
Parameters
get_interest_burden_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, with balance sheet items averaged over the same number of period ends. 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 (per quarter and not annualized with quarterly data). | 4 |