Which ratio indicates how many times a company can cover its interest expense with earnings?

The interest coverage ratio is the measure that indicates how many times a company can cover its interest expense with its earnings before interest and taxes (EBIT). This ratio is critical for understanding a company's financial health, as it assesses a firm's ability to meet interest obligations from its earnings. A higher ratio signifies a greater ability to service debt and indicates lower risk for investors and creditors.

By calculating this ratio, stakeholders can gauge if the company's earnings are sufficient to cover interest costs, which protects against default in periods of financial stress. This makes the interest coverage ratio particularly relevant for evaluating risk in leveraged companies, where debt financing plays a significant role in business operations. The other choices address different aspects of financial analysis, such as capital structure (debt to equity), profitability (operating margin, profit margin), but they do not specifically measure the relationship between earnings and interest expenses.