Interest Ratios
Understand your financial performance with key interest-based metrics.
Return on Investment (ROI)
Measures the profitability of your investments over time.
Interest Coverage Ratio
Determines how easily a company can pay interest on outstanding debt.
Debt-to-Equity Ratio
Shows the balance between shareholder equity and debt used to finance assets.
CIBBP Financial Ratios Overview
| Ratio Name | Formula | Ideal Range | Interpretation |
|---|---|---|---|
| Simple Interest | (P x R x T) / 100 | - | Calculates interest over time without compounding. |
| Compound Interest | P x (1 + R/100) T - P | - | Interest is added to principal periodically and grows over time. |
| Interest Coverage Ratio | EBIT / Interest Expense | > 2.0 | Higher value means better ability to cover interest expenses. |
| Return on Assets (ROA) | Net Income / Total Assets | 5% - 10% | Shows efficiency in using assets to generate profit. |
| Return on Equity (ROE) | Net Income / Shareholder Equity | 10% - 20% | Measures profitability relative to shareholder equity. |
Financial Insight
Tracking and understanding your interest ratios can help identify financial strengths, optimize investments, and manage risks. Regular analysis ensures long-term stability and growth.