ICR
Interest Coverage Ratio
Short definition
Interest cover is operating profit (usually EBIT or EBITDA) divided by interest. It excludes principal, so it is a looser paying-power metric than DSCR.
Detailed explanation
Numerator and denominator are written in the facility: EBIT or EBITDA, cash or accrued interest, capitalised interest in or out. High inflation and floating rates cut ICR fast even if EBITDA is flat.
ICR ignores principal. On amortising and balloon loans DSCR can break while ICR still looks fine. Read the two together.
Why it matters for the CFO
Many corporate covenants use ICR or EBITDA/interest because the calc is simple. The CFO must show the credit committee that a principal wall is invisible in this ratio.
How it is calculated
ICR = FVÖK (veya FAVÖK) / Faiz gideri
Variables in the formula
- ICR: Interest coverage ratio
- EBIT: EBIT or contract EBITDA
- Interest: Interest (cash or accrued — contract definition)
How to read it
ICR of 4x is 4 TL of EBIT per 1 TL of interest. The required minimum depends on sector and lender policy; there is no universal threshold. Capitalising interest inflates ICR with no cash outlay.
Numerical example
EBIT 80 mn TL, interest 25 mn TL → ICR = 80 / 25 = 3.2x.
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Güven Sayılgan’s writing on this topic
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Definitions are educational. They are not investment, credit or tax advice.