Interest Coverage Ratio definition: Copy, customize, and use instantly
Introduction
The term "Interest Coverage Ratio" refers to a financial metric that measures a company's ability to meet its interest payment obligations on outstanding debt using its earnings. It is essential for assessing financial health, creditworthiness, and operational efficiency in various legal, financial, and contractual contexts.
Below are various examples of how "Interest Coverage Ratio" can be defined in different contexts. Copy the one that fits your needs, customize it, and use it in your contract.
Definition of "Interest Coverage Ratio" as applicable to loan agreements
This definition ties "Interest Coverage Ratio" to debt covenants.
"Interest Coverage Ratio" means the ratio of a company’s earnings before interest and taxes (EBIT) to its interest expenses, calculated to ensure compliance with loan agreement covenants.
Definition of "Interest Coverage Ratio" as related to financial performance
This definition connects "Interest Coverage Ratio" to operational efficiency.
"Interest Coverage Ratio" refers to the measure of a company’s ability to cover its interest obligations using its operating income or other relevant financial metrics.
Definition of "Interest Coverage Ratio" as tied to credit risk assessments
This definition links "Interest Coverage Ratio" to lending evaluations.
"Interest Coverage Ratio" means the ratio used by lenders or investors to assess the borrower’s capacity to meet interest payments, based on financial statements or projected earnings.
Definition of "Interest Coverage Ratio" as applicable to investment analysis
This definition applies "Interest Coverage Ratio" to investor decisions.
"Interest Coverage Ratio" refers to a financial metric used by investors to evaluate a company’s financial stability and its ability to sustain debt levels over time.
Definition of "Interest Coverage Ratio" as aligned with EBITDA calculations
This definition ties "Interest Coverage Ratio" to adjusted earnings.
"Interest Coverage Ratio" means the ratio of a company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) to its interest expenses, often used in credit analyses.
Definition of "Interest Coverage Ratio" as related to debt restructuring
This definition connects "Interest Coverage Ratio" to financial negotiations.
"Interest Coverage Ratio" refers to the measure used to determine whether a company’s financial position justifies restructuring its debt obligations or renegotiating interest terms.
Definition of "Interest Coverage Ratio" as tied to bond covenants
This definition links "Interest Coverage Ratio" to bondholder protections.
"Interest Coverage Ratio" means the financial metric calculated as part of bond covenants to ensure the issuer maintains sufficient earnings to cover interest payments on the bond.
Definition of "Interest Coverage Ratio" as applicable to default risk evaluation
This definition ties "Interest Coverage Ratio" to insolvency risk.
"Interest Coverage Ratio" refers to the financial measure used to estimate the risk of default by determining whether a company’s earnings are adequate to cover interest expenses.
Definition of "Interest Coverage Ratio" as aligned with liquidity assessments
This definition connects "Interest Coverage Ratio" to cash flow evaluations.
"Interest Coverage Ratio" means the ratio of available cash flow to interest obligations, ensuring sufficient liquidity to meet debt servicing requirements.
Definition of "Interest Coverage Ratio" as related to corporate finance policies
This definition ties "Interest Coverage Ratio" to financial management.
"Interest Coverage Ratio" refers to the financial benchmark used in corporate finance policies to maintain optimal leverage and debt service coverage.
Definition of "Interest Coverage Ratio" as tied to private equity transactions
This definition links "Interest Coverage Ratio" to leveraged investments.
"Interest Coverage Ratio" means the financial metric analyzed in private equity transactions to assess whether a target company can manage interest obligations after a leveraged buyout.
Definition of "Interest Coverage Ratio" as applicable to regulatory compliance
This definition connects "Interest Coverage Ratio" to legal obligations.
"Interest Coverage Ratio" refers to the metric required to meet regulatory standards for financial institutions or publicly traded companies in demonstrating debt sustainability.
Definition of "Interest Coverage Ratio" as aligned with profitability analysis
This definition ties "Interest Coverage Ratio" to income generation.
"Interest Coverage Ratio" means the ratio of net operating income to interest expenses, reflecting a company’s profitability and ability to manage its debt efficiently.
Definition of "Interest Coverage Ratio" as related to financial stress testing
This definition links "Interest Coverage Ratio" to risk management.
"Interest Coverage Ratio" refers to the financial measure used in stress testing to determine the impact of adverse economic conditions on a company’s ability to service debt.
Definition of "Interest Coverage Ratio" as tied to merger and acquisition (M&A) evaluations
This definition applies "Interest Coverage Ratio" to transactional due diligence.
"Interest Coverage Ratio" means the financial metric evaluated during M&A due diligence to determine the target company’s financial health and debt repayment capacity.
Definition of "Interest Coverage Ratio" as tied to cash-based calculations
This definition ties "Interest Coverage Ratio" to cash flow metrics.
"Interest Coverage Ratio" means the ratio of a company’s cash flow from operations to its interest expenses, highlighting its ability to meet interest obligations using cash earnings.
Definition of "Interest Coverage Ratio" as applicable to loan syndications
This definition connects "Interest Coverage Ratio" to multi-lender agreements.
"Interest Coverage Ratio" refers to the financial benchmark used in loan syndication agreements to ensure the borrower maintains sufficient earnings to cover collective interest payments.
Definition of "Interest Coverage Ratio" as related to dividend policies
This definition links "Interest Coverage Ratio" to shareholder returns.
"Interest Coverage Ratio" means the ratio analyzed to determine whether a company can sustainably pay dividends while meeting its interest payment obligations.
Definition of "Interest Coverage Ratio" as aligned with corporate ratings
This definition ties "Interest Coverage Ratio" to creditworthiness.
"Interest Coverage Ratio" refers to a key metric used by credit rating agencies to assess a company’s financial stability and its ability to meet debt servicing requirements.
Definition of "Interest Coverage Ratio" as tied to subordinated debt
This definition applies "Interest Coverage Ratio" to specific debt instruments.
"Interest Coverage Ratio" means the ratio calculated to evaluate a company’s ability to cover interest payments on subordinated debt, which ranks below senior obligations.
Definition of "Interest Coverage Ratio" as related to interest rate fluctuations
This definition connects "Interest Coverage Ratio" to variable rates.
"Interest Coverage Ratio" refers to the measure used to assess how changes in interest rates may impact a company’s ability to meet its debt obligations.
Definition of "Interest Coverage Ratio" as tied to financial modeling
This definition links "Interest Coverage Ratio" to projections.
"Interest Coverage Ratio" means the ratio incorporated into financial models to project a company’s ability to service debt under various growth or stress scenarios.
Definition of "Interest Coverage Ratio" as aligned with capital structure decisions
This definition ties "Interest Coverage Ratio" to leverage analysis.
"Interest Coverage Ratio" refers to a financial metric used to evaluate the impact of leverage on a company’s ability to generate sufficient earnings to cover interest expenses.
Definition of "Interest Coverage Ratio" as related to non-recurring expenses
This definition connects "Interest Coverage Ratio" to adjusted earnings.
"Interest Coverage Ratio" means the ratio of earnings adjusted to exclude non-recurring expenses, ensuring a clearer view of a company’s capacity to service debt.
Definition of "Interest Coverage Ratio" as tied to debt service coverage
This definition links "Interest Coverage Ratio" to comprehensive obligations.
"Interest Coverage Ratio" refers to the metric used alongside debt service coverage ratios to provide a holistic view of a company’s ability to meet both interest and principal payments.
Definition of "Interest Coverage Ratio" as applicable to refinancing strategies
This definition ties "Interest Coverage Ratio" to restructuring debt.
"Interest Coverage Ratio" means the financial measure considered during refinancing to evaluate a company’s improved ability to manage its interest obligations under new terms.
Definition of "Interest Coverage Ratio" as aligned with peer benchmarking
This definition connects "Interest Coverage Ratio" to industry comparisons.
"Interest Coverage Ratio" refers to the metric used for comparing a company’s financial health to that of its industry peers, focusing on its ability to cover interest payments.
Definition of "Interest Coverage Ratio" as related to leveraged buyouts (LBOs)
This definition ties "Interest Coverage Ratio" to private equity transactions.
"Interest Coverage Ratio" means the ratio analyzed to determine whether a target company in a leveraged buyout can sustain debt levels and meet associated interest obligations.
Definition of "Interest Coverage Ratio" as tied to loan amortization schedules
This definition links "Interest Coverage Ratio" to repayment planning.
"Interest Coverage Ratio" refers to the measure used to assess whether a company’s earnings are sufficient to meet the interest components of its loan amortization schedules.
Definition of "Interest Coverage Ratio" as applicable to secured debt
This definition ties "Interest Coverage Ratio" to collateral-backed loans.
"Interest Coverage Ratio" means the ratio used to evaluate a company’s ability to service secured debt obligations, ensuring continued compliance with collateral-backed loan agreements.
Definition of "Interest Coverage Ratio" as tied to multi-currency debt
This definition ties "Interest Coverage Ratio" to global financial obligations.
"Interest Coverage Ratio" means the ratio used to evaluate a company’s ability to meet interest payments on multi-currency debt obligations, accounting for currency exchange impacts.
Definition of "Interest Coverage Ratio" as related to stress-testing scenarios
This definition connects "Interest Coverage Ratio" to financial resilience.
"Interest Coverage Ratio" refers to the measure applied in stress-testing scenarios to evaluate a company’s ability to maintain interest payments under adverse economic conditions.
Definition of "Interest Coverage Ratio" as applicable to convertible debt
This definition links "Interest Coverage Ratio" to hybrid instruments.
"Interest Coverage Ratio" means the ratio used to assess a company’s capacity to meet interest payments on convertible debt instruments prior to conversion into equity.
Definition of "Interest Coverage Ratio" as tied to cost of capital
This definition applies "Interest Coverage Ratio" to financing costs.
"Interest Coverage Ratio" refers to the measure used to ensure that a company’s earnings sufficiently cover the cost of capital, including interest expenses on borrowed funds.
Definition of "Interest Coverage Ratio" as aligned with fixed-charge coverage
This definition ties "Interest Coverage Ratio" to broader obligations.
"Interest Coverage Ratio" means the financial metric used alongside fixed-charge coverage ratios to evaluate a company’s ability to cover both interest and other fixed financial obligations.
Definition of "Interest Coverage Ratio" as related to mezzanine financing
This definition connects "Interest Coverage Ratio" to subordinated loans.
"Interest Coverage Ratio" refers to the metric used to assess a company’s ability to service mezzanine financing, which typically carries higher interest rates than senior debt.
Definition of "Interest Coverage Ratio" as tied to equity-linked instruments
This definition links "Interest Coverage Ratio" to derivative debt.
"Interest Coverage Ratio" means the ratio calculated to determine a company’s ability to meet interest payments on equity-linked instruments such as bonds with warrants.
Definition of "Interest Coverage Ratio" as applicable to tax shield benefits
This definition ties "Interest Coverage Ratio" to interest deductions.
"Interest Coverage Ratio" refers to the measure used to evaluate the impact of tax-deductible interest payments on a company’s overall financial health and debt servicing capacity.
Definition of "Interest Coverage Ratio" as aligned with long-term debt obligations
This definition ties "Interest Coverage Ratio" to extended liabilities.
"Interest Coverage Ratio" means the metric used to assess a company’s ability to meet interest obligations on long-term debt over an extended time horizon.
Definition of "Interest Coverage Ratio" as related to unsecured debt
This definition connects "Interest Coverage Ratio" to non-collateralized loans.
"Interest Coverage Ratio" refers to the measure used to evaluate a company’s ability to service unsecured debt, which lacks collateral backing.
Definition of "Interest Coverage Ratio" as tied to growth-stage companies
This definition links "Interest Coverage Ratio" to early financial stability.
"Interest Coverage Ratio" means the ratio used to assess the financial health of growth-stage companies, focusing on their ability to meet interest obligations during scaling phases.
Definition of "Interest Coverage Ratio" as applicable to restructuring agreements
This definition ties "Interest Coverage Ratio" to debt renegotiations.
"Interest Coverage Ratio" refers to the financial metric considered in restructuring agreements to determine revised terms for interest obligations based on earnings capacity.
Definition of "Interest Coverage Ratio" as aligned with joint venture agreements
This definition connects "Interest Coverage Ratio" to shared financial obligations.
"Interest Coverage Ratio" means the measure used to evaluate the ability of a joint venture to meet its shared interest obligations based on combined earnings.
Definition of "Interest Coverage Ratio" as related to capital-intensive industries
This definition ties "Interest Coverage Ratio" to sector-specific requirements.
"Interest Coverage Ratio" refers to the financial metric analyzed for companies in capital-intensive industries to ensure they can meet interest payments on substantial debt levels.
Definition of "Interest Coverage Ratio" as tied to bridge financing
This definition links "Interest Coverage Ratio" to short-term funding.
"Interest Coverage Ratio" means the ratio used to assess a company’s capacity to service interest on bridge financing during temporary funding periods.
Definition of "Interest Coverage Ratio" as tied to project finance
This definition ties "Interest Coverage Ratio" to infrastructure or project-specific funding.
"Interest Coverage Ratio" means the ratio used to evaluate a project’s ability to generate sufficient revenue to cover interest obligations on project-specific debt financing.
Definition of "Interest Coverage Ratio" as related to variable interest rate debt
This definition connects "Interest Coverage Ratio" to floating-rate loans.
"Interest Coverage Ratio" refers to the measure used to assess a company’s ability to meet interest payments on variable rate debt, accounting for interest rate fluctuations.
Definition of "Interest Coverage Ratio" as applicable to asset-backed securities
This definition links "Interest Coverage Ratio" to securitized debt.
"Interest Coverage Ratio" means the ratio used to evaluate the performance of asset-backed securities, ensuring adequate earnings to meet interest payments on securitized instruments.
Definition of "Interest Coverage Ratio" as tied to export credit arrangements
This definition applies "Interest Coverage Ratio" to trade financing.
"Interest Coverage Ratio" refers to the financial metric used to assess a borrower’s ability to service interest obligations under export credit financing agreements.
Definition of "Interest Coverage Ratio" as aligned with distressed asset portfolios
This definition ties "Interest Coverage Ratio" to high-risk investments.
"Interest Coverage Ratio" means the ratio used to analyze distressed asset portfolios, evaluating whether earnings from such assets are sufficient to meet associated interest expenses.
Definition of "Interest Coverage Ratio" as related to hybrid securities
This definition connects "Interest Coverage Ratio" to blended instruments.
"Interest Coverage Ratio" refers to the financial metric used to determine a company’s ability to meet interest obligations on hybrid securities, such as convertible bonds or preference shares.
Definition of "Interest Coverage Ratio" as tied to covenant compliance
This definition links "Interest Coverage Ratio" to contractual obligations.
"Interest Coverage Ratio" means the measure used to ensure compliance with financial covenants in loan or bond agreements, requiring a minimum ratio to avoid default.
Definition of "Interest Coverage Ratio" as applicable to investment-grade companies
This definition ties "Interest Coverage Ratio" to credit ratings.
"Interest Coverage Ratio" refers to the financial metric analyzed for investment-grade companies to confirm their ability to maintain high credit ratings by meeting interest obligations.
Definition of "Interest Coverage Ratio" as tied to prepayment penalties
This definition links "Interest Coverage Ratio" to debt prepayment.
"Interest Coverage Ratio" means the ratio used to evaluate whether a company can afford prepayment penalties while continuing to meet its regular interest obligations.
Definition of "Interest Coverage Ratio" as aligned with interest rate hedging
This definition ties "Interest Coverage Ratio" to risk mitigation.
"Interest Coverage Ratio" refers to the metric used to assess a company’s capacity to maintain hedged positions for managing interest rate risk while covering interest expenses.
Definition of "Interest Coverage Ratio" as related to syndicated loans
This definition connects "Interest Coverage Ratio" to multi-lender arrangements.
"Interest Coverage Ratio" means the financial metric used in syndicated loan agreements to ensure the borrower maintains sufficient earnings to meet collective interest payments.
Definition of "Interest Coverage Ratio" as tied to unsecured bond issuances
This definition links "Interest Coverage Ratio" to non-collateralized securities.
"Interest Coverage Ratio" refers to the measure used to evaluate a company’s ability to service interest on unsecured bond issuances, which lack specific collateral backing.
Definition of "Interest Coverage Ratio" as applicable to cyclical industries
This definition ties "Interest Coverage Ratio" to sector volatility.
"Interest Coverage Ratio" means the ratio analyzed for companies in cyclical industries to determine their ability to meet interest obligations during economic downturns.
Definition of "Interest Coverage Ratio" as aligned with equity issuance strategies
This definition connects "Interest Coverage Ratio" to funding diversification.
"Interest Coverage Ratio" refers to the financial metric used to assess whether equity issuances can improve a company’s ability to cover interest payments by reducing leverage.
Definition of "Interest Coverage Ratio" as related to green financing
This definition ties "Interest Coverage Ratio" to sustainable debt instruments.
"Interest Coverage Ratio" means the ratio used to evaluate a company’s ability to meet interest obligations on green bonds or sustainability-linked loans.
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