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 the reciprocal of, and should not be confused with, the Interest Coverage Ratio (get_interest_coverage_ratio), which divides operating profit by interest expense and is therefore unbounded above.

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.

No programming experience? With the Finance Toolkit MCP server, AI assistants such as Claude and ChatGPT can calculate the Interest Burden Ratio for you. Just ask in plain English.

Calculate the Interest Burden Ratio in Python

The Interest Burden Ratio is available in the Ratios module of the open-source Finance Toolkit. Install it with:

pip install financetoolkit -U

Then call get_interest_burden_ratio as shown below.

from financetoolkit import Toolkit

toolkit = Toolkit(["TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")

interest_burden_ratios = toolkit.ratios.get_interest_burden_ratio()

Which returns:

  2021 2022 2023 2024 2025
TSLA 0.9724 1.0046 1.1217 1.2705 1.2119

Parameters

get_interest_burden_ratio accepts the following parameters:

  • rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
  • growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
  • lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
  • standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
  • trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.
Gross Margin Operating Margin Net Profit Margin Income Before Tax Profit Margin Effective Tax Rate Return on Assets (RoA) Return on Equity (RoE) Return on Invested Capital (RoIC) Income Quality Ratio Return on Tangible Assets (RoTA) Return on Capital Employed (RoCE) Net Income per EBT

The Ratios module page introduces the module, and the sidebar lists all of its functions.

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