What is Biomea Fusion, Inc.'s earnings per share (EPS)?

Biomea Fusion, Inc. (BMEA) reported diluted earnings per share of -$1.18 for fiscal year 2025. EPS represents the portion of a company's net income allocated to each outstanding share of common stock and is widely used to evaluate profitability on a per-share basis.

Biomea Fusion, Inc. (BMEA) Financials

BMEA

FY2025 annual

Revenue Not reported for FY2025

Net Income -$61.8M +55.4% YoY

EPS (Diluted) -$1.18 YoY not available

Operating Cash Flow -$70.4M +41.3% YoY

Market Cap $62.8M as of Oct 16, 2026

Price / Sales n/m no revenue reported

Price / Earnings n/m net loss, so no earnings multiple, FY2025

Price / Book 5.2x on $12.1M equity, Q2 FY2026

A multiple compares the market's price with a filed figure; it says what the market pays, not how the business is doing. The market capitalization is the vendor's as of Oct 16, 2026; every other figure is from the SEC filings on this page. Not financial advice.

Source SEC Filings (10-K/10-Q) Latest period Q2 FY2026, ended Jun 30, 2026 Reported Aug 5, 2026 Currency USD FYE December

Newest figures come from the 10-Q for Q2 FY2026, filed Aug 5, 2026. Each column of the statement tables below links to the filing it was taken from, and every filing is listed on the BMEA SEC filings page.

This page shows Biomea Fusion, Inc. (BMEA) financial statements, including the income statement, balance sheet, cash flow statement, and key financial ratios. View 7 years of annual fundamentals and quarterly data, with year-over-year growth rates and compound annual growth rates (CAGR). All figures are derived from SEC filings (10-K and 10-Q reports).

Rhea AI BMEA FY2025 2026-10-03

The company remains a research-funded operation: R&D and operating cash outflows dominate results while external financing supports the balance sheet.

In FY2025, R&D fell 47.5% and operating cash outflow fell 41.3% alongside a smaller net loss, pointing to spending reduction as the main visible driver of improvement. Because revenue is not reported, the statements do not demonstrate a sales-led recovery.

FY2025 financing inflow of $67.9M nearly offset operating cash outflow of $70.4M, indicating that the business remained funded primarily outside its operations. Its debt-to-equity ratio rose to 1.0x from 0.6x in FY2024, showing greater financial claims relative to equity.

The reported liquidity comparison equaled 9.5 months of the latest annual operating outflow, while the current ratio was 5.2x; together, these describe substantial short-term asset coverage but not self-funding operations. Total liabilities of $29.0M were nearly equal to total equity of $29.6M, making the capital structure less equity-heavy than in earlier periods.

Financial Health Signals

Financial health score not available

Biomea Fusion, Inc. does not currently provide enough eligible data for a peer-relative financial health score, so none is published. The signals and metrics below are current.

Piotroski F-Score Partial

2/6

Biomea Fusion, Inc. passes 2 of 6 computable financial strength tests (3 of the nine could not be computed from available data). 1 of 4 profitability signals pass, 1 of 2 leverage/liquidity signals pass.

Earnings Quality No Cash Backing

N/A

Biomea Fusion, Inc. reported a net loss of $61.8M while operations used $70.4M of cash. With neither figure positive, the ratio between the two carries no quality signal.

Interest Coverage At Risk

N/A

Biomea Fusion, Inc. reported an operating loss of $83.5M against $1.9M in interest expense. There is no operating profit to cover interest, so interest must be met from cash reserves or from financing rather than from operations.

Key Financial Metrics

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Earnings & Revenue

EBITDA

-$12.7M

YoY+38.7%

QoQ-0.1%

Biomea Fusion, Inc.'s EBITDA was -$12.7M in Q2 2026, measuring earnings before interest, taxes, depreciation, and amortization. This represents an increase of 38.7% from the same quarter a year earlier. Against the prior quarter it is down 0.1%.

Net Income

-$8.3M

YoY+59.8%

QoQ+32.9%

Biomea Fusion, Inc. reported -$8.3M in net income in Q2 2026. This represents an increase of 59.8% from the same quarter a year earlier. Against the prior quarter it is up 32.9%.

EPS (Diluted)

-$0.12

QoQ+29.4%

Biomea Fusion, Inc. earned -$0.12 per diluted share (EPS) in Q2 2026. Against the prior quarter it is up 29.4%.

Revenue

Not reported for Q2 2026.

Cash & Balance Sheet

Cash & Debt

$34.8M

YoY-38.1%

QoQ-22.1%

5Y CAGR-26.8%

Biomea Fusion, Inc. held $34.8M in cash as of Q2 2026; long-term debt is not reported for that period.

Shares Outstanding

72M

QoQ+0.3%

5Y CAGR+20.1%

Biomea Fusion, Inc. had 72M shares outstanding in Q2 2026. Against the prior quarter it is up 0.3%.

Free Cash Flow

Not reported for Q2 2026.

Dividends Per Share

Not reported for Q2 2026.

Margins & Returns

Return on Equity

-68.6%

YoY+6.8pp

QoQ-2.3pp

Biomea Fusion, Inc.'s ROE was -68.6% in Q2 2026, measuring profit generated per dollar of shareholder equity. This is up 6.8 percentage points from the same quarter a year earlier. Against the prior quarter it is down 2.3 percentage points.

Gross Margin

Not reported for Q2 2026.

Operating Margin

Not reported for Q2 2026.

Net Margin

Not reported for Q2 2026.

Capital Allocation

R&D Spending

$9.1M

YoY-44.8%

QoQ+0.2%

Biomea Fusion, Inc. invested $9.1M in research and development in Q2 2026. This represents a decrease of 44.8% from the same quarter a year earlier. Against the prior quarter it is up 0.2%.

Share Buybacks

Not reported for Q2 2026.

Capital Expenditures

Not reported for Q2 2026.

BMEA Income Statement

Figures in USD, abbreviated K (thousand), M (million), B (billion), T (trillion). Negative values carry a minus sign and red type. Each change compares the year with the year before it, and each quarter with the same quarter a year earlier.

BMEA quarterly income statement

Metric	TTM	FY2510-K	FY2410-K	FY2310-K	FY2210-K	FY2110-K	FY2010-K	FY1910-K
R&D Expenses	N/A	$62.0M-47.5%	$118.1M+15.2%	$102.5M+63.5%	$62.7M+124.0%	$28.0M+662.6%	$3.7M+236.2%	$1.1M
SG&A Expenses	N/A	$19.3M-25.6%	$26.0M+10.2%	$23.6M+12.8%	$20.9M+53.0%	$13.7M+725.5%	$1.7M+1507.8%	$103K
Operating Income	N/A	-$83.5M+42.0%	-$144.1M-14.2%	-$126.1M-50.8%	-$83.6M-100.7%	-$41.7M-682.2%	-$5.3M-345.8%	-$1.2M
EBITDA	N/A	-$82.1M+42.3%	-$142.3M-14.2%	-$124.6M-50.2%	-$82.9M-100.3%	-$41.4M-678.7%	-$5.3M-345.1%	-$1.2M
Interest Expense	N/A	$1.9M-67.1%	$5.6M-36.4%	$8.9M	N/A	N/A	N/A	N/A
Income Tax	N/A	$0	$0	$0	$0	$0	$0	N/A
Net Income	N/A	-$61.8M+55.4%	-$138.4M-18.1%	-$117.3M-43.3%	-$81.8M-96.9%	-$41.6M-680.7%	-$5.3M-344.4%	-$1.2M
EPS (Basic)	N/A	-$1.18+69.2%	-$3.83-11.3%	-$3.44-22.9%	-$2.80-60.9%	-$1.74-241.2%	-$0.51	N/A
EPS (Diluted)	-$0.29	-$1.18	-$3.83-11.3%	-$3.44-22.9%	-$2.80-60.9%	-$1.74	-$0.51	N/A
Diluted Shares (Avg)	N/A	52M	36M+5.9%	34M+16.5%	29M+22.7%	24M	11M	N/A

Metric	Q2'2610-Q	Q1'2610-Q	Q4'2510-Q	Q3'2510-Q	Q2'2510-Q	Q1'2510-Q	Q4'2410-K	Q3'2410-Q
R&D Expenses	$9.1M-44.8%	$9.1M-60.2%	N/A	$14.4M-47.1%	$16.6M-47.9%	$22.9M-32.2%	$25.2M-18.2%	$27.2M+7.5%
SG&A Expenses	$3.6M-23.1%	$3.7M-46.4%	N/A	$4.2M-38.2%	$4.7M-33.4%	$6.8M-6.4%	$4.8M-25.2%	$6.8M+17.7%
Operating Income	-$12.8M+40.0%	-$12.8M+57.0%	N/A	-$20.8M+38.9%	-$21.3M+45.3%	-$29.7M+27.6%	-$30.1M+19.4%	-$34.0M-9.4%
EBITDA	-$12.7M+38.7%	-$12.7M+56.5%	N/A	-$20.4M+39.3%	-$20.8M+46.0%	-$29.2M+28.0%	-$29.6M+19.8%	-$33.6M-9.5%
Interest Expense	$319K+3.2%	$430K-4.4%	N/A	$4.4M+251.3%	$309K-80.9%	$450K-77.5%	N/A	$1.3M
Net Income	-$8.3M+59.8%	-$12.4M+57.6%	N/A	-$16.4M+50.0%	-$20.7M+44.4%	-$29.3M+25.1%	-$29.3M+16.0%	-$32.8M-15.3%
EPS (Basic)	-$0.12+76.5%	-$0.17+78.8%	$0.27+133.3%	-$0.27+70.3%	-$0.51+50.5%	-$0.80+26.6%	-$0.81+17.3%	-$0.91-13.7%
EPS (Diluted)	-$0.12	-$0.17	$0.27	-$0.27	-$0.51+50.5%	-$0.80+26.6%	-$0.81+17.3%	-$0.91-13.7%
Diluted Shares (Avg)	72M	72M	N/A	60M	41M+12.7%	37M+2.1%	36M+1.4%	36M+1.6%

Not reported in any period shown, so not listed: Revenue, Cost of Revenue, Gross Profit, Income Tax.

BMEA Balance Sheet

BMEA quarterly balance sheet

Metric	FY2510-K	FY2410-K	FY2310-K	FY2210-K	FY2110-K	FY2010-K	FY1910-K
Total Assets	$58.6M-26.7%	$79.9M-60.0%	$199.9M+54.6%	$129.3M-30.4%	$185.7M+197.0%	$62.5M	N/A
Current Assets	$58.0M-15.0%	$68.3M-61.9%	$179.2M+52.1%	$117.8M-33.3%	$176.6M+183.8%	$62.2M	N/A
Cash & Equivalents	$55.8M-4.2%	$58.3M-67.0%	$176.9M+58.1%	$111.9M-23.2%	$145.7M+136.2%	$61.7M+25713.8%	$239K
Short-Term Investments	$0	$0	$0-100.0%	$1.1M-95.9%	$27.8M	$0	$0
Accounts Receivable	N/A	N/A	N/A	N/A	N/A	$16K	N/A
Long-Term Investments	$0	$0	$0	$0-100.0%	$1.9M	$0	$0
Total Liabilities	$29.0M+2.3%	$28.4M-7.6%	$30.7M+47.8%	$20.8M+200.0%	$6.9M-87.9%	$57.4M	N/A
Current Liabilities	$11.1M-48.8%	$21.7M-5.2%	$22.9M+19.7%	$19.1M+311.9%	$4.6M+186.4%	$1.6M	N/A
Non-Current Liabilities	$17.9M+167.8%	$6.7M-14.5%	$7.8M+369.7%	$1.7M-27.0%	$2.3M-95.9%	$55.7M	N/A
Total Equity	$29.6M-42.7%	$51.6M-69.5%	$169.2M+55.9%	$108.5M-39.3%	$178.8M+3358.8%	$5.2M+24714.3%	-$21K
Retained Earnings	-$449.0M-16.0%	-$387.3M-55.6%	-$248.8M-89.1%	-$131.6M-164.5%	-$49.7M-508.5%	-$8.2M	N/A

Metric	Q2'2610-Q	Q1'2610-Q	Q4'2510-Q	Q3'2510-Q	Q2'2510-Q	Q1'2510-Q	Q4'2410-K	Q3'2410-Q
Total Assets	$36.9M-49.6%	$46.4M-15.7%	$58.6M-26.7%	$55.2M-50.0%	$73.2M-46.3%	$55.1M-67.3%	$79.9M-60.0%	$110.4M-50.9%
Current Assets	$36.4M-43.7%	$46.3M+3.7%	$58.0M-15.0%	$49.4M-47.2%	$64.7M-44.4%	$44.7M-69.7%	$68.3M-61.9%	$93.6M-53.8%
Cash & Equivalents	$34.8M-38.1%	$44.7M+24.6%	$55.8M-4.2%	$46.6M-47.0%	$56.2M-50.4%	$35.9M-75.3%	$58.3M-67.0%	$88.0M-55.8%
Short-Term Investments	$0	$0	$0	$0	$0	$0	$0	$0
Long-Term Investments	$0	$0	$0	$0	$0	$0	$0	$0
Total Liabilities	$24.7M-45.8%	$27.7M+5.1%	$29.0M+2.3%	$39.6M+14.9%	$45.7M+41.7%	$26.3M-20.7%	$28.4M-7.6%	$34.4M+35.2%
Current Liabilities	$10.5M-40.3%	$9.3M-53.1%	$11.1M-48.8%	$15.6M-43.5%	$17.6M-30.2%	$19.8M-21.5%	$21.7M-5.2%	$27.6M+70.1%
Non-Current Liabilities	$14.3M-49.3%	$18.4M+182.6%	$17.9M+167.8%	$24.0M+249.1%	$28.1M+298.2%	$6.5M-18.0%	$6.7M-14.5%	$6.9M-25.8%
Total Equity	$12.1M-55.9%	$18.7M-34.9%	$29.6M-42.7%	$15.6M-79.4%	$27.5M-73.5%	$28.7M-78.8%	$51.6M-69.5%	$76.0M-61.9%
Retained Earnings	-$469.8M-7.4%	-$461.5M-10.8%	-$449.0M-16.0%	-$453.7M-26.7%	-$437.3M-34.5%	-$416.5M-44.7%	-$387.3M-55.6%	-$357.9M-67.3%

Not reported in any period shown, so not listed: Inventory, Accounts Receivable, Goodwill, Long-Term Debt.

BMEA Cash Flow Statement

BMEA quarterly cash flow statement

Metric	TTM	FY2510-K	FY2410-K	FY2310-K	FY2210-K	FY2110-K	FY2010-K	FY1910-K
Operating Cash Flow	-$47.2M	-$70.4M+41.3%	-$119.9M-24.1%	-$96.6M-54.8%	-$62.4M-76.1%	-$35.4M-694.8%	-$4.5M-248.6%	-$1.3M
Depreciation & Amortization	N/A	$1.4M-19.4%	$1.7M+15.4%	$1.5M+119.2%	$691K+177.5%	$249K+3012.5%	$8K	$0
Stock-Based Compensation	N/A	$9.5M-50.1%	$19.1M+35.1%	$14.1M+36.7%	$10.3M+65.8%	$6.2M+1836.0%	$322K	N/A
Capital Expenditures	N/A	N/A	$362K-89.3%	$3.4M+227.2%	$1.0M-67.5%	$3.2M+6117.6%	$51K	N/A
Free Cash Flow	N/A	N/A	-$120.3M-20.3%	-$100.0M-57.6%	-$63.4M-64.3%	-$38.6M-756.1%	-$4.5M	N/A
Investing Cash Flow	N/A	N/A	-$362K+83.7%	-$2.2M-108.1%	$27.3M+182.0%	-$33.4M-65302.0%	-$51K	N/A
Financing Cash Flow	N/A	$67.9M+3971.0%	$1.7M-99.0%	$163.8M+13120.2%	$1.2M-99.2%	$153.2M+132.2%	$66.0M+4481.0%	$1.4M

Metric	Q2'2610-Q	Q1'2610-Q	Q4'2510-Q	Q3'2510-Q	Q2'2510-Q	Q1'2510-Q	Q4'2410-K	Q3'2410-Q
Operating Cash Flow	-$10.0M+47.8%	-$11.7M+54.5%	-$13.9M+53.5%	-$11.6M+54.2%	-$19.2M+41.1%	-$25.7M+19.9%	-$30.0M-31.4%	-$25.2M-5.5%
Depreciation & Amortization	$20K-96.0%	$46K-90.2%	$47K-90.0%	$400K0.0%	$500K+25.0%	$468K+11.4%	$469K+11.7%	$400K0.0%
Stock-Based Compensation	N/A	$1.6M-50.1%	N/A	N/A	N/A	$3.2M-36.9%	N/A	N/A
Capital Expenditures	N/A	N/A	N/A	$0-100.0%	$0-100.0%	$0-100.0%	$82K+925.0%	$186K+376.9%
Free Cash Flow	N/A	N/A	N/A	-$11.6M+54.5%	-$19.2M+41.3%	-$25.7M+20.0%	-$30.1M-31.7%	-$25.4M-6.1%
Investing Cash Flow	$0	$550K	N/A	$0+100.0%	$0+100.0%	$0+100.0%	-$82K-925.0%	-$186K-376.9%
Financing Cash Flow	N/A	N/A	$23.1M+5496.1%	$2.0M+2752.2%	$39.6M+3598.3%	$3.3M+2703.4%	$413K-33.6%	$69K-50.0%

Not reported in any period shown, so not listed: Dividends Paid, Share Buybacks.

BMEA Financial Ratios

Margins and returns are percentages; the remaining ratios are unitless multiples. Each change compares the year with the year before it, and each quarter with the same quarter a year earlier.

BMEA quarterly financial ratios

Metric	FY2510-K	FY2410-K	FY2310-K	FY2210-K	FY2110-K	FY2010-K	FY1910-K
Return on Equity	-209.1%+59.3pp	-268.4%-199.1pp	-69.3%+6.1pp	-75.4%-52.1pp	-23.3%+79.8pp	-103.0%	N/A
Return on Assets	-105.5%+67.7pp	-173.2%-114.5pp	-58.7%+4.6pp	-63.3%-40.9pp	-22.4%-13.9pp	-8.5%	N/A
Current Ratio	5.23+2.1x	3.15-4.7x	7.84+1.7x	6.17-31.9x	38.08-0.4x	38.43	N/A
Debt-to-Equity	0.98+0.4x	0.55+0.4x	0.180.0x	0.19+0.2x	0.04-11.1x	11.10	N/A

Metric	Q2'2610-Q	Q1'2610-Q	Q4'2510-Q	Q3'2510-Q	Q2'2510-Q	Q1'2510-Q	Q4'2410-K	Q3'2410-Q
Return on Equity	-68.6%+6.8pp	-66.3%+35.5pp	N/A	-105.0%-61.9pp	-75.4%-39.5pp	-101.8%-73.0pp	-56.8%-36.2pp	-43.2%-28.9pp
Return on Assets	-22.6%+5.8pp	-26.8%+26.4pp	N/A	-29.7%0.0pp	-28.3%-1.0pp	-53.1%-30.0pp	-36.7%-19.2pp	-29.7%-17.1pp
Current Ratio	3.48-0.2x	4.98+2.7x	5.23+2.1x	3.18-0.2x	3.68-0.9x	2.25-3.6x	3.15-4.7x	3.39-9.1x
Debt-to-Equity	2.04+0.4x	1.48+0.6x	0.98+0.4x	2.53+2.1x	1.66+1.3x	0.92+0.7x	0.55+0.4x	0.45+0.3x

Not reported in any period shown, so not listed: Gross Margin, Operating Margin, Net Margin, Asset Turnover, FCF Margin.

Similar Companies

Newest fiscal year on record for each company. The health score is the peer-relative Financial Health Score for that year; a dash means no score is published for it.

Company	Fiscal year	Revenue	Net income	Net margin	Market cap	Health score
Biomea Fusion, Inc. BMEA	FY2025	N/A	-$61.8M	N/A	$62.8M	—
Corbus Pharmaceuticals Holdings, Inc. CRBP	FY2025	N/A	-$78.5M	N/A	$83.7M	—
Pyxis Oncology, Inc. PYXS	FY2025	$13.9M	-$79.6M	N/A	$150.1M	55/100
KALA BIO, Inc. KALA	FY2025	$0	-$27.0M	N/A	$3.7M	—
Equillium, Inc. EQ	FY2025	N/A	-$22.4M	N/A	$83.7M	—
Zentalis Pharmaceuticals, Inc. ZNTL	FY2025	$0	-$137.1M	N/A	$212.1M	—

Where Biomea Fusion, Inc. Ranks

Frequently Asked Questions

Is Biomea Fusion, Inc. profitable?

No, Biomea Fusion, Inc. (BMEA) reported a net income of -$61.8M in fiscal year 2025.

What is Biomea Fusion, Inc.'s EBITDA?

Biomea Fusion, Inc. (BMEA) had EBITDA of -$82.1M in fiscal year 2025, measuring earnings before interest, taxes, depreciation, and amortization.

What is Biomea Fusion, Inc.'s return on equity (ROE)?

Biomea Fusion, Inc. (BMEA) has a return on equity of -209.1% for fiscal year 2025, measuring how efficiently the company generates profit from shareholder equity.

What is Biomea Fusion, Inc.'s operating cash flow?

Biomea Fusion, Inc. (BMEA) recorded an outflow of $70.4M in operating cash flow during fiscal year 2025, representing cash used by core business activities.

What are Biomea Fusion, Inc.'s total assets?

Biomea Fusion, Inc. (BMEA) had $58.6M in total assets as of fiscal year 2025, including both current and long-term assets.

How much does Biomea Fusion, Inc. spend on research and development?

Biomea Fusion, Inc. (BMEA) invested $62.0M in research and development during fiscal year 2025.

How many shares does Biomea Fusion, Inc. have outstanding?

Biomea Fusion, Inc. (BMEA) had 72M shares outstanding as of fiscal year 2025.

What is Biomea Fusion, Inc.'s current ratio?

Biomea Fusion, Inc. (BMEA) had a current ratio of 5.23 as of fiscal year 2025, which is generally considered healthy.

What is Biomea Fusion, Inc.'s debt-to-equity ratio?

Biomea Fusion, Inc. (BMEA) had a debt-to-equity ratio of 0.98 as of fiscal year 2025, measuring the company's financial leverage by comparing total debt to shareholder equity.

What is Biomea Fusion, Inc.'s return on assets (ROA)?

Biomea Fusion, Inc. (BMEA) had a return on assets of -105.5% for fiscal year 2025, measuring how efficiently the company uses its assets to generate profit.

What is Biomea Fusion, Inc.'s P/E ratio?

Biomea Fusion, Inc. (BMEA) has no price-to-earnings ratio at the moment: net loss, so no earnings multiple (FY2025). The market capitalization is $62.8M as of Oct 16, 2026; a multiple compares that price with a filed figure and says nothing about the quality of the business.

What is Biomea Fusion, Inc.'s price-to-sales ratio?

Biomea Fusion, Inc. (BMEA) has no price-to-sales ratio at the moment: no revenue reported. The market capitalization is $62.8M as of Oct 16, 2026; a multiple compares that price with a filed figure and says nothing about the quality of the business.

How does Biomea Fusion, Inc.'s liquidity compare with its operating cash outflow?

At the end of fiscal year 2025, Biomea Fusion, Inc. (BMEA) held $55.8M in cash, cash equivalents and investments, and reported an operating cash outflow of $70.4M over that year. Dividing the one by the other, the reported balance equals about 10 months of the outflow reported that year. This is arithmetic over figures already filed, not a projection: it assumes nothing about future spending, financing or operations.

What is Biomea Fusion, Inc.'s Piotroski F-Score?

Biomea Fusion, Inc. (BMEA) has a Piotroski F-Score of 2 out of 6 computable signals; 3 of the nine could not be computed from available data, so the full-scale strength rating is not shown. The F-Score evaluates nine binary signals across profitability (positive ROA, positive cash flow, improving ROA, earnings quality), leverage (decreasing debt, improving liquidity, no share dilution), and operating efficiency (improving gross margin, improving asset turnover). Scores of 7 to 9 indicate strong and improving fundamentals. Learn more in our complete guide to financial health indicators.

Are Biomea Fusion, Inc.'s earnings high quality?

Biomea Fusion, Inc. (BMEA) reported a net loss of $61.8M while operations used $70.4M of cash. With neither figure positive, the ratio between the two carries no quality signal. This ratio compares operating cash flow to net income. A ratio above 1.0x means the company generates more cash than its reported earnings, indicating sustainable, cash-backed profits. Ratios below 1.0x suggest earnings rely on accounting accruals rather than actual cash generation. Learn more in our complete guide to financial health indicators.

Can Biomea Fusion, Inc. cover its interest payments?

Biomea Fusion, Inc. (BMEA) reported an operating loss of $83.5M against $1.9M in interest expense. There is no operating profit to cover interest, so interest must be met from cash reserves or from financing rather than from operations. This ratio divides operating income by interest expense. Ratios above 5x indicate strong debt-servicing ability, while ratios below 2x suggest the company may face difficulty meeting interest payments if earnings decline. Learn more in our complete guide to financial health indicators.