What does the Interest coverage ratio indicate?

No of times interest on long-term debts is covered by the profits available for interest.

Interest Coverage Ratio :
It is a ratio that deals with the servicing of interest on loan. It is a measure of security of interest payable on long-term debts. It expresses the relationship between profits available for payment of interest and the amount of interest payable.
It is calculated as follows:
Interest Coverage Ratio = Net Profit before Interest and Tax Interest on long-term debts.
It reveals the number of times interest on long-term debts is covered by the profits available for interest. A higher ratio ensures the safety of interest on debts.