Interest Cover

jewels.p

Can anyone explain this in simple terms? Googled it but cant find anything that makes me fully understand it. Thanks

Julie:001_smile:

mikes

Hi Julie,

This shows how how much more profit the company is making than it's interest repayments. It indicates the strength of the company, ie it means that the more it generates, the less likely it will be using its credit from you to pay its cashflow.

The formula is Operating profit divided by Interest payable.

reddwarf

http://www.bized.co.uk/learn/business/accounting/busaccounts/notes/ipay-th.htm

should help too!

jewels.p

Thanks you two!:thumbup1:

mikes

That's a handy site, it gives a lot of handy information on other topics as well.

Thanks.

reddwarf

far out!