What does interest coverage mean?

How many times the company's operating profit covers its interest bill.

How do you interpret interest coverage?

Higher is safer; below ~2× is a warning that earnings provide little cushion against the debt burden. Debt-free companies have no interest expense and the ratio is left blank.

How does interest coverage compare across companies?

Comparable across leveraged non-financials; less relevant for net-cash companies with negligible interest.

Morgan Stanley MS Interest coverage

Interest coverage at other companies

JPMorgan ChaseJPM

1.8×0.0×

Bank of AmericaBAC

1.5×+0.1×

Wells Fargo & CompanyWFC

1.6×+0.1×

Charles Schwab CorporationSCHW

4.5×+2.0×

CitigroupC

1.3×+0.1×

Goldman Sachs GroupGS

1.3×+0.1×

Other financials

Income statement

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Revenue$20.6B+16.0%

Net income$5.6B+29.0%

EPS (diluted)$3.43+31.9%

Balance sheet

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Cash & equivalents$133.53B+47.2%

Total debt$371.57B+18.4%

Total equity$114.29B+7.0%

Total assets$1.58T+21.6%

Cash flow

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Operating cash flow-$7.1B+70.4%

CapEx$754.0M+5.8%

Free cash flow-$7.9B+68.2%

Valuation

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Market cap$352B+38.9%

Enterprise value$590.04B+21.4%

P/E19.4×+1.7×

P/S4.8×+0.9×

Profitability

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Net margin24.6%+2.4pp

Returns & leverage

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Return on equity16.4%+2.5pp

Debt / equity3.3×+0.3×

Questions, answered.

What does interest coverage mean?: How many times the company's operating profit covers its interest bill.
How do you interpret interest coverage?: Higher is safer; below ~2× is a warning that earnings provide little cushion against the debt burden. Debt-free companies have no interest expense and the ratio is left blank.
How does interest coverage compare across companies?: Comparable across leveraged non-financials; less relevant for net-cash companies with negligible interest.