Calculate the interest coverage ratio, a solvency ratio that measures a company’s ability to pay its interest expenses on outstanding debt.

The interest coverage ratio evaluates a company’s ability to meet its interest obligations from its operating income. A higher ratio indicates a company’s stronger ability to cover its interest payments using its earnings, implying lower financial risk. Conversely, a lower ratio suggests a company may have difficulty meeting its interest obligations and could be at higher risk of default.

The formula is as follows:

\[\text{Interest Coverage Ratio} = (\text{Operating Income} + \text{Depreciation and Amortization}) / \text{Interest Expense}\]

Also known as: TIE, times interest earned.

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

Calculate the Interest Coverage Ratio in Python

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

pip install financetoolkit -U

Then call get_interest_coverage_ratio as shown below.

from financetoolkit import Toolkit

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

interest_coverage_ratios = toolkit.ratios.get_interest_coverage_ratio()

Which returns:

  2021 2022 2023 2024 2025
AAPL 45.4567 44.538 31.9908 - -
TSLA 25.4286 90.0471 86.9103 35.5543 31.074

Parameters

get_interest_coverage_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.
Debt to Assets Ratio Debt to Equity Ratio Equity Multiplier Debt Service Coverage Ratio Free Cash Flow Yield Net Debt to EBITDA Ratio Cash Flow Coverage Ratio CAPEX Coverage Ratio CAPEX Dividend Coverage Ratio Debt to Capital Ratio Preferred Dividend Coverage Ratio Interest Paid to Interest Expense Ratio

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

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