Interest Paid to Interest Expense Ratio
Calculate the interest paid to interest expense ratio, which measures how much of the accrual-based interest expense reported on the income statement was actually paid out in cash during the period.
A ratio consistently below one can indicate that interest is being accrued (e.g. on payment-in-kind debt) rather than paid, while a ratio well above one can indicate the payment of previously accrued interest or a mismatch between the cash and accrual reporting periods, both of which are relevant quality-of-earnings signals.
The formula is as follows:
\[\text{Interest Paid to Expense Ratio} = \text{Interest Paid} / \text{Interest Expense}\]Also known as: cash interest coverage, interest cash conversion.
Interest Paid to Interest Expense Ratio in Python
get_interest_paid_to_expense_ratio is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_interest_paid_to_expense_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
interest_paid_to_expense_ratios = toolkit.ratios.get_interest_paid_to_expense_ratio()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | 1.0159 | 0.9775 | 0.9669 | - | - |
| TSLA | 0.717 | 0.7958 | 0.8077 | 0.7914 | 0 |
Parameters
get_interest_paid_to_expense_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.