Read the variables and convention
Use EBIT and positive interest expense for the same period under a specified convention.
| Symbol or input | Meaning |
|---|---|
| EBIT | Earnings before interest and taxes |
| I | Interest expense for the corresponding period |
Check a stated example
EBIT 300 and interest expense 60 give 5.0×.
Keep the amount units, reporting date or period and the numerator definition beside the calculation. A matching label makes the result reproducible.
Interpret the result within its scope
This earnings-based measure is different from cash available at the payment date. No universal covenant or safe threshold follows from the formula.
For a comparison, inspect the relevant notes and accounting conventions as well as the calculated number. A change in the inputs and a change in the definition answer different analytical questions.