management Back Forwards
Accounting: Ratio Analysis
 

(2) Interest Cover

A measure of the firm's ability to have sufficient profits available to cover the interest payable to debt finance and still have sufficient profit left over to pay dividends to shareholders.

Profit on ordinary activities before interest (and tax)
Interest payable

(Not applicable to Smiths as it is a net receiver of interest)

 

Owners' Equity/Fixed Assets

A measure of the commitment of shareholders' funding to the finance of fixed assets - the match between permanent capital and long-term investments. Of interest to bankers particularly.

Shareholders' Funds
=
266.7
=
1.8 times
Fixed Assets
147.8