Interest Coverage From Continuing Operations (Historical)
Returns the interest coverage ratio, which measures how many times a company can pay its interest expense from operating earnings. This is a key indicator of financial health and debt serviceability.
Understanding the Metric
Interest coverage is calculated as:
Interest Coverage = EBIT / Interest ExpenseInterpretation:
- > 5.0: Strong - easily covers interest payments
- 2.5 - 5.0: Adequate - comfortable coverage
- 1.5 - 2.5: Weak - minimal cushion
- < 1.5: Distressed - may struggle to pay interest
Parameters
| Parameter | Description |
|---|---|
| Symbol | Stock ticker (e.g., AAPL, MSFT) |
| Year | Fiscal year or period code (lq, ly, lq-1, ly-1, lt, lt-1) |
| Quarter | Optional: 1, 2, 3, or 4 (default: 1) |
| TTM | Optional: "TTM" for trailing twelve months |
Risk Thresholds
| Ratio | Risk Level |
|---|---|
| > 10x | Very Low Risk |
| 5-10x | Low Risk |
| 2.5-5x | Moderate Risk |
| 1-2.5x | High Risk |
| < 1x | Distressed |
Syntax
=hf_Interest_coverage_from_continuing_operations(Symbol, Year, [Quarter], [TTM])Examples
=hf_Interest_coverage_from_continuing_operations("AAPL", 2023, 4)=hf_Interest_coverage_from_continuing_operations("T", "ly")=hf_Interest_coverage_from_continuing_operations("MSFT", 2023, , "TTM")=hf_Interest_coverage_from_continuing_operations(A1, B1, C1)=hf_Interest_coverage_from_continuing_operations("VZ", "lq")When to Use
- Assessing debt serviceability
- Credit analysis and risk evaluation
- Comparing financial leverage across companies
- Evaluating bond/debt investment risk
- Monitoring covenant compliance
When NOT to Use
| Scenario | Use Instead |
|---|---|
| Need interest expense | hf_Interest_Expense() |
| Need debt-to-equity | Check leverage ratio functions |
| Company has no debt | Ratio will be infinite/N/A |
| Need cash-based coverage | Calculate from operating cash flow |
Common Issues & FAQ
What if the ratio is negative?
A negative ratio occurs when EBIT is negative (operating loss). This is a serious concern as the company can't cover interest from operations.
What's a good interest coverage ratio?
Generally, > 3x is considered safe for investment-grade credit. Utilities and REITs may operate with lower ratios (2-3x) due to stable cash flows.
Why does this differ from cash interest coverage?
This uses EBIT (accrual accounting). Cash interest coverage uses operating cash flow, which may be higher or lower depending on non-cash charges and working capital changes.
Excel Templates Using Interest Coverage From Continuing Operations (Historical)
These ready-made MarketXLS templates call hf_Interest_coverage_from_continuing_operations() in their worksheet formulas. Open one to see the function working inside a complete model.
Related Formulas
More MarketXLS Historical Fundamentals formulas you can use in the same worksheet:
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