Interest Expense Ratio Income Statement

This line aggregates interest expense interest income and other non operating expenses as we can see in apple s 10k footnotes.

Interest expense ratio income statement. The interest expense ratio intimates the amount of gross income that is being spent to pay the interest on borrowed money. A interest expense ratio higher than 10 indicates that the business or farm is spending too much of its gross. It represents interest payable on any borrowings bonds loans convertible debt or lines of credit. The profit or loss is determined by taking all revenues and subtracting all expenses from both operating and non operating activities this statement is one of.

These expenses highlight interest accrued during the period and not the interest amount paid over the time period. The interest expense to debt ratio is a solvency ratio that can help determine if a company firm is going through financial issues or credit difficulties. Learn how to calculate and interpret some of the most common and insightful financial ratios like earnings per share from a company s income statement. The lower the percentages the better a business or farm should be no higher than 5 to be considered strong.

Net refers to the fact that management has simply subtracted interest income from interest expense to come up with one figure. In other words if a company paid 20 in interest on its debts and earned 5 in interest from its savings account the income statement would only show interest expense net of 15. The interest expense to debt ratio is expressed as a percentage. Interest coverage ratio earnings before interest and taxes ebit interest expense net profit margin net income after taxes revenue return on equity roe net profit average shareholder equity for the period.

Interest expense is one of the core expenses found in the income statement income statement the income statement is one of a company s core financial statements that shows their profit and loss over a period of time. In this tutorial i ll teach you 7 important income statement ratios that you need to know when analyzing an income statement. These ratios are widely used by large institutional investors to small retail investors. Interest expense is a non operating expense shown on the income statement.

For example notice that apple s 2016 income statement above contains a line called other income expense net of 1 348 million.