Interest Cover

= Earnings before interest and tax/Interest

Understanding Finance

Default risk is the chance that a company is unable to make interest payments on their debt obligations. A business with low level of Net Debt/EBITDA at a very high rate of interest may face a greater default risk than a more highly geared company facing an exceptionally low rate of interest. Interest cover is a good way to capture this risk.

Understanding Finance

Helping clients understand what we do is key to building relationships. To explain some of the industry jargon that creeps into our world, we’ve pulled together a section of our site to help.


Related articles
Understanding Finance

Conceptually we have a reasonable understanding of inflation. As an economic term, inflation represents the general price rise of goods and services over a predetermined time.

Understanding Finance

Usually, your bank would pay interest on your savings accounts. Negative interest rates turn this around and mean customers have to pay banks to hold their savings.

Understanding Finance

You probably sort of know how index linked gilts, or “linkers,” work. The redemption value is linked to the change in the retail price index, or RPI, that takes place over the life of the gilt.