Given the current scenario, investors should gauge the changing market dynamics and accordingly chalk out a sturdy investment strategy. Well, you can decide to buy or sell a particular stock by looking at its sales and earnings numbers. However, such a strategy does not always warrant superior returns when the market faces a myriad of issues. A critical analysis of the company's financial background is always required for a better investment decision. Indeed, a company should be sound enough to meet its financial obligations. This can be judged with coverage ratios — the higher these are, the more efficient an enterprise will be in meeting its financial obligations. Here, we have discussed one such ratio called the interest coverage ratio. Interest Coverage Ratio = Earnings before Interest & Taxes (EBIT) divided by Interest Expense. Halozyme Therapeutics, Inc., Leidos Holdings, Inc. (NYSE: LDOS), Atmos Energy Corporation (NYSE: ATO) and Addus HomeCare Corporation (NASDAQ: ADUS) are four stocks with an impressive interest coverage ratio. Why Interest Coverage Ratio? The interest coverage ratio is used to determine how effectively a company can pay the interest charged on its debt. Debt, which is crucial for most companies to finance operations, comes at a cost called interest. Interest expense has a direct bearing on a company's profits. The company's creditworthiness depends on how effectively it meets its interest obligations. Therefore, the interest coverage ratio is one of the essential criteria to factor in before making any investment decision. The interest coverage ratio suggests the number of times interest could be paid from earnings and also gauges the margin of ...