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Interest Coverage Ratio History Chart
Chart any stock's interest coverage ratio across the last 10 fiscal years and see at a glance whether debt service capacity is strengthening or eroding. Color-coded bars flag each year's solvency zone — from Strong to Critical — with a one-line verdict. Pair it with the interest coverage calculator for a live reading and the interest coverage screener to benchmark against peers.
How to Read ICR Trends
The interest coverage ratio measures how many times a company's operating earnings (EBIT) cover its annual interest expense. A ratio of 5× or above means the company earns five dollars of operating profit for every dollar of interest owed — a comfortable buffer even in a downturn. Charting it over 10 years tells a richer story than a single snapshot: a declining ICR signals that debt is growing faster than earnings, or that profitability is eroding, or both.
Watch for trend breaks. A company that has maintained an 8× ICR for seven years and then drops to 3× in back-to-back years deserves scrutiny — especially if the drop coincides with an acquisition or a refinancing. Cross-check against the Debt/EBITDA History Chart to see whether total leverage has risen alongside the ICR decline, and the Net Debt History Chart to understand whether the absolute debt burden is growing.
Context also matters across sectors. Utilities and regulated infrastructure companies often operate at lower ICRs (2–4×) because their revenues are contractually stable. Technology and consumer companies with lumpy revenues need more headroom. Use the interest coverage screener to rank the company against mid-cap peers in the same sector.
Frequently Asked Questions
What is the interest coverage ratio?
The interest coverage ratio (ICR) measures how many times a company's operating earnings (EBIT) can cover its interest expense in a given year. It is calculated as EBIT divided by interest expense. A ratio of 3× means the company earned three times more in operating profit than it owes in interest — leaving a buffer even if earnings fall. The ratio is widely used by credit analysts and equity investors to gauge whether a company can comfortably service its debt without straining cash flow.
What is a good interest coverage ratio?
Most analysts consider an ICR above 3× healthy: the company has enough headroom that a moderate earnings decline would not jeopardize debt service. An ICR of 5× or above is considered strong — the company is well-insulated against volatility. Ratios between 1.5× and 3× are adequate but thin; a cyclical downturn could put the company under pressure. Below 1.5× is a danger zone — earnings barely cover interest, and any earnings shortfall may require additional borrowing or asset sales. The appropriate threshold also varies by industry: capital-intensive sectors like utilities often run at lower ratios by design because their cash flows are predictable.
How does this chart help investors?
A single-year ICR snapshot can be misleading — a company might have a great ratio today but a deteriorating trend that signals future stress. This chart plots up to 10 fiscal years of annual ICR so you can see whether debt coverage is improving, stable, or eroding. A declining trend from 6× to 2× over five years may warrant more scrutiny than a steady 3× reading. The color-coded bars (green ≥5×, yellow 3–5×, orange 1.5–3×, red <1.5×) let you spot the shift at a glance, while the 5-year average reference line separates structural changes from one-year anomalies.
What causes a falling ICR?
The ICR can fall for several reasons: growing debt (higher interest expense), declining operating profit (EBIT), or both at once. Common causes include margin compression from rising costs, revenue deceleration, an acquisition financed with debt, or a refinancing at higher interest rates in a rising-rate environment. It is worth checking whether the drop is driven by higher interest expense (a financing decision) or falling EBIT (an operating deterioration) — the two have different implications. Pair this chart with the Debt/EBITDA History Chart to see leverage trends alongside coverage.
ICR vs debt-to-equity — what is the difference?
The interest coverage ratio and the debt-to-equity (D/E) ratio both measure financial risk, but from different angles. The D/E ratio looks at the balance sheet — how much of the capital structure is debt relative to equity — and is a stock measure at a point in time. The ICR looks at the income statement — whether the company is currently generating enough operating profit to service its debt obligations — and is a flow measure over a period. A company can have a high D/E but still easily cover its interest if its earnings are strong enough, or a low D/E and still struggle to cover interest if profitability is weak. Both metrics together give a more complete picture of solvency.
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