Formula
Interest coverage = operating income ÷ interest expense (times)
With operating income of KRW 12 billion and interest expense of KRW 1 billion, interest coverage is 12 times.
Definition
Interest coverage is operating income divided by interest expense. It shows how many times the money the company earned from its core business (operating income) covers the interest it owes. Interest coverage of 5 means operating income is five times the interest expense, leaving a considerable margin after the interest is paid.
This metric shows directly whether debt is manageable. If the debt ratio looks at the size of debt and the current ratio at when it falls due, interest coverage answers the practical question of whether the company can earn enough to pay the interest that comes with that debt.
Interest coverage of 1 means all of operating income goes to paying interest, and below 1 is a warning sign that the money earned from the core business does not even cover the interest. Companies that stay below 1 for several years in a row are often called marginal or zombie companies. Jupick uses it as a metric in the financial stability area.
How to read it
In general, higher interest coverage is read as more capacity to bear the interest burden. 1 or more is commonly seen as minimal ability to pay interest, and 3 to 5 or more is usually needed to call it comfortable. In Jupick's strengths and weaknesses summary, 12 or more is generally labeled “Wide room to cover interest” and below 1 “Operating profit does not cover interest expense”.
The line at 1 is especially important. Whether a company clears it decides whether it carries its debt on its own or has to take on new debt to keep up with the interest.
It needs to be read alongside the interest rate environment. When rates rise, interest expense increases on the same debt and interest coverage falls, so the more a company borrows, the more sensitive it is to rate changes.
Interest coverage across the market now
The values that fall at each point when the stocks Jupick covers are lined up by Interest coverage, smallest to largest. Positions in the line are used instead of an average because a few unusually large values can drag a single average a long way.
KoreaBased on 32 stocks
| Lowest 25% | Middle | Highest 25% |
|---|---|---|
| 1.6x | 7.4x | 29.9x |
Smallest value -3.9x, largest value 6745.3x
Of the major Korean stocks, only 32 made it into this table. Left out: 168 stocks whose value is not a measured one.
OverseasBased on 163 stocks
| Lowest 25% | Middle | Highest 25% |
|---|---|---|
| 5.0x | 8.7x | 17.7x |
Smallest value -0.0x, largest value 4598.1x
Of the major overseas stocks, only 163 made it into this table. Left out: 36 stocks whose value is not a measured one.
Stocks are rarely left out at random. Companies for which a metric does not hold, or for which the source gives no value, tend to be the ones in weaker shape, so the stocks left in the table are the ones in better condition. The middle value of such a table leans to the favorable side compared with the whole market, and the more stocks are left out, the more it leans.
How to read each range
- Lowest 25%
- The bottom quarter for room to cover interest from operating income. A value below 1 means the money earned from the core business does not even reach the interest, so in this band whether the value clears 1 matters far more than the boundary numbers in the table.
- Middle half
- Capacity to cover interest is in the common range for the market. When rates rise, interest expense on the same debt increases and the value falls, so heavily borrowed companies move around a lot even within this band.
- Highest 25%
- The quarter where the interest burden is very light relative to operating income. With almost no debt, the denominator becomes thin and the multiple jumps into the hundreds, so comparing values within this band means little. The key fact is not the large value but that there is almost no debt.
The two values at either end of the table above are the boundaries that split the stocks into three groups. What it means to belong to each group is written above.
Two stocks that fall just either side of a boundary have practically the same value. Being in different groups does not by itself make them different. The boundaries are drawn again from each day’s sample, so a company can change groups even when nothing about it has changed.
Lowest and highest describe the order of size only, not good or bad. The data is updated once a day.
Stocks with high interest coverage now
- 1BWONIK IPS CO., LTD.6745.3x
- 2AOld Dominion Freight Line, Inc.4598.1x
- 3SHANMI Semiconductor CO., LTD.859.1x
- 4BKEPCO Engineering & Construction Company, Inc528.3x
- 5SNVIDIA Corporation503.4x
Stocks on Jupick's watchlist with positive interest coverage, sorted from the highest.
Points to watch
- A company that operates with no borrowing and almost no interest expense shows very large interest coverage or a meaningless figure. In that case the key point is not the size of the number but the fact that there is almost no debt.
- When operating income is negative, interest coverage turns negative, which means there is no operating income at all to pay interest with.
- Operating income reflects non-cash costs such as depreciation, so it can differ from the cash actually available. Reading it with the cash flow statement is more accurate.
- For Korean stocks this value is often blank. In a measurement on October 8, 2026, 167 of the major Korean stocks (83.5%) were blank, and 33 had an actual value. Jupick downloaded the filings of twelve of the 127 non-financial companies among those 167 and found the same cause: the disclosure template requires finance costs on the income statement but has no required line for the interest expense actually incurred. A blank here therefore says nothing about the company's interest burden, and when comparing this value between Korean stocks it is safer to first confirm that both have a value.
- Even when a Korean stock has a value, the interest expense used as the denominator comes from one of two places. If the body of the income statement has an interest expense line, Jupick uses that figure; if not, it uses the interest expense adjustment added back in the cash flow statement to reconcile operating cash flow. The second differs from the first in capitalized interest and in how amounts are allocated across periods, so the two are not the same quantity, and the stock page notes under the Financial health section which one the value was divided by. The note fills in as each stock's filings are newly downloaded, so some stocks do not have that line yet. Comparing the multiples of two stocks that use different sources down to the decimal point means little.