EBIT Coverage Ratio Clause Samples

The EBIT Coverage Ratio clause defines a financial covenant that requires a borrower to maintain a minimum ratio of earnings before interest and taxes (EBIT) to interest expenses. In practice, this means the borrower must demonstrate, typically on a quarterly or annual basis, that its operating income is sufficient to cover its interest obligations by a specified multiple. This clause serves to protect lenders by ensuring the borrower maintains adequate financial health to meet debt service requirements, thereby reducing the risk of default.
EBIT Coverage Ratio. EBIT Coverage Ratio not less than 2.0 to 1.0 as of each calendar quarter end, determined on a rolling 4-quarter basis, with "EBIT" defined as net profit before tax plus interest expense, and with "EBIT Coverage Ratio" defined as EBIT divided by the aggregate of total interest expense"
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Related to EBIT Coverage Ratio

  • Cash Flow Coverage Ratio The ratio of (a) the Company’s Cash Flow to (b) the sum of (i) the Company’s consolidated Interest Expense plus (ii) the Company’s scheduled payments of principal (including the principal component of Capital Leases) to be paid during the 12 months following any date of determination shall at all times exceed (1) 1.5 to 1.0. Compliance with the ratio will be tested as of the last day of each month, with Cash Flow and Interest Expense being calculated for the twelve months then ended.

  • Interest Coverage Ratio The Borrower will not permit the Interest Coverage Ratio to be less than 2.75 to 1.0 on the last day of any Fiscal Quarter.

  • Debt Coverage Ratio At the end of any Fiscal Quarter, the Debt Coverage Ratio will not be greater than the amount set forth below for the applicable time set forth below: (i) During an Acquisition Period: 5.25 to 1.0 (ii) Other than an Acquisition Period: 4.75 to 1.0

  • Asset Coverage Ratio The Borrower will not permit the Asset Coverage Ratio to be less than 1.50 to 1 at any time.

  • Minimum Interest Coverage Ratio The Borrowers shall not permit the Interest Coverage Ratio, calculated as of the end of each fiscal quarter for the four fiscal quarters then ended, to be less than 3.50 to 1.00.