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:

Also known as: cash interest coverage, interest cash conversion.

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Calculate the Interest Paid to Interest Expense Ratio in Python

The Interest Paid to Interest Expense Ratio is available in 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:

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.

Related Solvency Ratios

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