A financial ratio that measures a company’s ability to pay only its actual cash interest obligations from operating earnings (typically EBITDA). It excludes PIK (Payment-in-Kind) interest, since PIK is not paid in cash but added to the principal, making this ratio a clearer indicator of near-term liquidity and cash-paying capacity.

If you would like to learn more about the financing process, please see our Termgrid Primers – Series 1: The Debt Financing Process.