Not fully cash - includes accrued sales, income and expenses. The amount of earnings available to make interest payments after capital expenditures and all operating and non-operating expenses except depreciation and amortization, interest and income taxes. A proxy for internal cash flow. Use when risk is very high, EBIT margins are low, or interest or tax expenses are high. Do not include debt-related amortization expense in the numerator.
Capital expenditures exclude acquisitions and proceeds of asset sales.
Gross interest is interest incurred before subtracting interest income and capitalized interest. Not fully cash - includes accrued sales, income and expenses. No distinction between maintenance and expansion capex. The amount of earnings available to repay debt principal after all expenses except depreciation, amortization, the net change in deferred tax liabilities, and other non-cash expenses and income. A standard ratio.