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Interest Coverage Ratio Screener — Solvency Rankings
Mid/large-cap stocks ranked by interest coverage ratio (EBIT ÷ interest expense), with four solvency tiers from Strong to Danger. Shows EBIT and interest expense per company so you see the earnings and debt cost driving each ratio. Filter by sector to isolate well-covered names or identify overleveraged risks.
Understanding the Interest Coverage Ratio
The interest coverage ratio is one of the most direct measures of debt safety. It answers a single question: for every dollar of interest owed, how many dollars of operating profit is the company generating? A company with EBIT of $500 million and interest expense of $100 million has a coverage ratio of 5× — it earns five times what its lenders require. That buffer absorbs a significant decline in earnings before the company faces difficulty servicing its debt.
The ratio becomes critical in rising-rate environments. Companies that issued debt at low fixed rates for several years are now rolling those maturities into significantly higher coupon obligations. A company that comfortably covered interest at 3× when borrowing at 3% may find that ratio compresses to 1.5× when refinancing at 7% — without any change in operating performance. This screener surfaces those structural shifts in real time, using the most recent income statement data available.
The four solvency tiers in this screener are calibrated to practical investing thresholds. Strong (>5×) means the debt load is a minor consideration relative to earnings. Adequate (2–5×) is the standard passing grade — serviceable, but worth monitoring if margins compress. Stressed (1–2×) means any meaningful earnings decline could push the company into technical difficulty. Danger (<1×) means operating profit does not cover the interest bill from operations alone.
For the broader framework on reading a company's debt structure and financial health, see our balance sheet analysis guide.
Interest Coverage vs. Debt-to-Equity: Different Lenses
The debt-to-equity ratio tells you how much debt is on the balance sheet relative to equity — it is a stock measure of leverage. The interest coverage ratio tells you whether the income statement can service that debt — it is a flow measure of debt safety. Both matter, and they can diverge in important ways. A company can carry a high debt-to-equity ratio but maintain strong interest coverage if its earnings are substantial. Conversely, a company with modest absolute debt can still show stressed coverage if its margins are thin. Use the two together: high debt-to-equity plus low coverage is the most dangerous combination; low debt-to-equity plus strong coverage is the safest.
Reading the Solvency Tiers
Strong (>5×) companies earn far more than their interest obligations require. For most industries this signals genuine financial health, though it is worth checking whether excess earnings are being reinvested productively. Adequate (2–5×) is the zone where most well-run leveraged businesses operate — enough cushion for a moderate earnings decline. Stressed (1–2×) is where risk begins to concentrate: these companies are covering interest, but the margin is thin. Any revenue shortfall, margin compression, or rate refinancing could tip them toward difficulty. Danger (<1×) companies are not covering their interest from operations — they are drawing on reserves, selling assets, or relying on credit rollovers. This tier warrants the most scrutiny before any investment.
Frequently asked questions
Why use EBIT instead of EBITDA for interest coverage?
EBIT is the standard because it reflects what the business actually earns after accounting for the depreciation of its physical assets — a real economic cost for capital-intensive businesses. EBITDA adds back depreciation and amortization, which can meaningfully overstate cash-generating capacity for companies with heavy fixed assets like manufacturers, utilities, and telecom operators. That said, EBITDA-based coverage is common in leveraged buyout analysis and in industries where capex is episodic rather than continuous. This screener uses EBIT as the more conservative and broadly applicable measure.
What industries naturally have lower interest coverage ratios?
Capital-intensive industries that routinely carry significant long-term debt — utilities, real estate investment trusts (REITs), telecom operators, and industrials — structurally operate with lower coverage ratios than asset-light businesses. A utility with a coverage ratio of 2.5× may be perfectly healthy given its predictable regulated revenue stream and low business risk; the same ratio at a cyclical manufacturer would warrant concern. The sector filter in this screener helps you compare companies within their own industry peer group rather than against an absolute standard that ignores business model differences.
How does this screener handle companies with no debt?
Companies with zero interest expense are excluded from the screener entirely. For those businesses, interest coverage is not a meaningful metric — there is no debt to service. The screener focuses specifically on companies that carry interest-bearing obligations, where the coverage ratio provides actionable information about debt sustainability. Debt-free companies are best evaluated on other financial health metrics like ROIC, free cash flow margin, and balance sheet composition.
How does this screener get its data?
The screener fetches income statement data for mid/large-cap stocks from Yahoo Finance via our API. EBIT and interest expense are drawn from the most recent annual income statement filing. Interest coverage is computed as EBIT divided by the absolute value of interest expense. All data refreshes every six hours. Stocks missing reliable income statement data are excluded from the results. Tickers with no interest expense are excluded as the ratio is not applicable.
Should I invest in a company with a low interest coverage ratio?
A low coverage ratio is a risk factor, not an automatic disqualifier. Some of the most attractive value investments arise in companies with temporarily depressed earnings — where the coverage ratio looks stressed based on a bad quarter but the business is recovering. The key is determining whether the low coverage is structural (a persistently overleveraged balance sheet) or cyclical (a temporary earnings trough). For structural cases, check how the debt matures — upcoming refinancing at higher rates can worsen coverage further. For cyclical cases, look at free cash flow, management's debt reduction history, and whether the company has committed liquidity facilities. Pair this screener with the Altman Z-Score and Piotroski F-Score for a more complete financial health picture.
How do I get deeper analysis on a company in this screener?
Click the ticker symbol in the first column to open the Basis Report stock intelligence page for that company. There you can run a full DCF valuation, review the balance sheet in detail, assess earnings quality, examine capital allocation history, and generate a complete institutional-quality research report. The screener surfaces the companies with the most relevant coverage ratios; the full stock page provides the depth to understand whether a low ratio reflects a structural vulnerability or a recoverable situation.