Interest Coverage RatioICR

The interest coverage ratio, or times interest earned, is calculated as earnings before interest and tax (EBIT) divided by interest expense. It measures the safety margin available to lenders: how far profit could fall before the firm becomes unable to pay interest from current earnings.

A ratio of 1 means operating profit just equals interest; below 1, the firm cannot meet interest from operating profit and must use reserves, sell assets or borrow more. Lenders usually expect a comfortable cushion, and acceptable levels depend on the stability of the borrower's industry.

Banks use the ICR together with the debt service coverage ratio (DSCR) in credit appraisal. DSCR is broader: it compares cash available for debt service with both interest and principal instalments due. ICR focuses only on interest. Both ratios help a credit officer judge whether a loan can be serviced from business income rather than from sale of collateral.

ब्याज भुक्तानी क्षमता अनुपात = ब्याज तथा करअघिको आम्दानी (EBIT) / ब्याज खर्च। नाफा कति घट्दासम्म ब्याज तिर्न सकिन्छ भन्ने साहुका लागि सुरक्षा सीमा देखाउँछ।

अनुपात १ भए सञ्चालन नाफा र ब्याज बराबर हुन्छ; १ भन्दा कम भए सञ्चालन नाफाबाट ब्याज तिर्न सकिँदैन। बैंकले कर्जा विश्लेषणमा ICR सँगै ऋण सेवा क्षमता अनुपात (DSCR) पनि हेर्छ; DSCR ले ब्याज र साँवा दुवैलाई समेट्छ। यसले कर्जा धितो बिक्रीबाट नभई व्यवसायको आम्दानीबाट तिर्न सकिन्छ कि भनी हेर्न सघाउँछ।