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Interest cover |
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Interest coverInterest cover measures the amount of interest paid by a company on its borrowings against its operating profit in the same period.The ratio shows the impact of gearing on a company's profit and loss account. If the figure is low, a small reduction in operating profits, or a rise in the cost of borrowing, can wipe out pre-tax profits. To calculate interest cover, divide the operating profits by the interest paid.Example: a company which has profits of £4m and which pays net interest of £1m, has interest cover of 4.Similar MatchesInterest equalization taxInterest equalization taxA tax levied between 1963 and 1974 by the United States of 15% on interest received from foreign borrowers, intended to discourage capital outflows. Interest rate parity theoremInterest rate parity theoremExpression that the interest rate differential between two countries is equal to the difference between the forward foreign exchange rate and the spot rate. Forward interest rateForward interest rateInterest rate fixed today on a loan to be made at some future date. Matured noninterest bearing debtMatured noninterest bearing debtOutstanding savings bonds and notes that have reached final maturity and no longer earn interest. Includes all Series A-D, F, G, 1, J, and K bonds. Series E bonds (issued between May 1941 and November 1965), Series EE (issued since January 1980), Series H (issued from June 1952 through December 1979), and savings notes issued between May 1967 and October 1970 have a final maturity of 30 years. Series HH bonds (issued since January 1980) mature after 20 years. Earnings before interest, taxes, and depreciation (EBITD)Earnings before interest, taxes, and depreciation (EBITD)A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes. Depreciation expenses are not included in the costs. Further SuggestionsInterest rate floorSimple interest Market interest rate Interest sensitive stock Times interest earned ratio Wild Interest compound interest Earnings before interest after taxes (EBIAT) Earnings before interest, taxes, depreciation, and amortization (EBITDA) Assumed interest rate Interest only loan Spot interest rate Any interest date Variable Interest Rate Compound interest Interim interest Best interests of creditors test mortgage interest deduction Mortgage interest deduction Open interest Covered Interest Rate Parity Add on interest Short interest theory Daily interest interest rate |
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