Interest Coverage Ratio

The interest coverage ratio measures the extent to which a company is able to cover its interest expenses from its operating profit. A high interest coverage ratio indicates strong debt-servicing capacity and low financial risk, with figures above 2.0-3.0x generally considered comfortable. A ratio below 1.5x indicates potential difficulty in meeting obligations.

The data (i.e., EBIT, interest expenses) used for the interest coverage ratio is based on the most recent financial information published by the respective companies (in annual or semi-annual reports).

For comparison purposes, we have calculated the median of the interest coverage ratios of these companies. The bar charts additionally illustrate the interquartile range (IQR) for each sector, based on the full set of interest coverage ratios of the individual companies in each sector. The IQR represents the middle 50% of observations in each sector, i.e. the range between the first and third quartiles.

The financial services sector (including banks, insurance companies, etc.) was excluded.