What is COOTEK INC's earnings per share (EPS)?

COOTEK INC (CTKYY) reported diluted earnings per share of $0.00 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.

COOTEK INC (CTKYY) Financials

CTKYY

FY2025 annual

Revenue $21.7M -28.4% YoY

Net Income -$78K -223.0% YoY

EPS (Diluted) $0.00 YoY not available

Free Cash Flow -$138K YoY not available

Source SEC Filings (10-K/10-Q) Latest period FY2025, ended Dec 31, 2025 Reported Apr 27, 2026 Currency USD FYE December

Newest figures come from the 20-F for FY2025, filed Apr 27, 2026. Each column of the statement tables below links to the filing it was taken from, and every filing is listed on the CTKYY SEC filings page.

COOTEK INC (CTKYY) reported $21.7M in revenue for fiscal year 2025, down 28.4% from the prior fiscal year. This page shows its income statement, balance sheet, cash flow statement, and key financial ratios. View 10 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 CTKYY FY2025 2026-10-04

The business is now much smaller, near break-even, and financed with a balance sheet where obligations still exceed resources.

The multi-year revenue contraction coincided with gross-margin compression from 87.9% to 70.2%, so the smaller base is also producing less gross profit per sales dollar.

In FY2025, the company reported a net loss of $78K and operating cash flow of -$77K, so earnings and cash broadly agree rather than showing a large accrual gap. But current liabilities of $6.8M exceeded current assets of $6.1M, making short-term obligations larger than the resources classified as current.

Total liabilities of $7.0M exceeded assets of $6.9M, leaving negative equity of $148K in FY2025. Gross profit was $15.2M, yet operating income was a $39K loss; near break-even economics therefore leave little room for revenue or cost slippage.

Financial Health Signals

Financial health score not available

COOTEK 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.

Altman Z-Score Distress

-41.22

COOTEK INC scores -41.22, below the 1.81 distress threshold. The score is driven primarily by a large market capitalization ($744K) relative to total liabilities ($7.0M). This indicates elevated financial distress risk and warrants close attention to liquidity and debt levels.

Distress-screening estimate for non-financial companies. Not computed for banks or insurers, where the Altman model does not apply.

Piotroski F-Score Partial

1/7

COOTEK INC passes 1 of 7 computable financial strength tests (2 of the nine could not be computed from available data). 1 of 4 profitability signals pass, no leverage/liquidity signals pass (rising debt, declining liquidity, or share dilution), neither operating efficiency signal passes.

Earnings Quality No Cash Backing

N/A

COOTEK INC reported a net loss of $78K while operations used $77K of cash. With neither figure positive, the ratio between the two carries no quality signal.

Interest Coverage At Risk

N/A

COOTEK INC reported an operating loss of $39K against $31K 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

None of these metrics is reported for Q4 2025.

Cash & Balance Sheet

Cash & Debt

$3.5M

YoY-15.2%

QoQ-15.2%

COOTEK INC held $3.5M in cash as of Q4 2025; long-term debt is not reported for that period.

Free Cash Flow

Not reported for Q4 2025.

Dividends Per Share

Not reported for Q4 2025.

Shares Outstanding

Not reported for Q4 2025.

Margins & Returns

None of these metrics is reported for Q4 2025.

Capital Allocation

None of these metrics is reported for Q4 2025.

CTKYY 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.

CTKYY quarterly income statement

Metric	FY2520-F	FY2420-F	FY2320-F	FY2210-K	FY2110-K	FY2010-K	FY1910-K	FY1810-K	FY1710-K	FY1610-K
Revenue	$21.7M-28.4%	$30.3M-5.2%	$32.0M-61.9%	$83.9M-69.2%	$272.1M-38.4%	$441.5M+148.2%	$177.9M+32.6%	$134.1M+259.2%	$37.3M+238.5%	$11.0M
Cost of Revenue	$6.5M-26.1%	$8.8M+45.2%	$6.0M-53.8%	$13.1M-60.2%	$32.8M+36.0%	$24.1M+57.7%	$15.3M+2.5%	$14.9M-25.7%	$20.1M-0.3%	$20.2M
Gross Profit	$15.2M-29.3%	$21.6M-16.9%	$25.9M-63.4%	$70.9M-70.4%	$239.3M-42.7%	$417.4M+156.7%	$162.6M+36.4%	$119.2M+591.5%	$17.2M+288.8%	-$9.1M
R&D Expenses	$3.5M-7.6%	$3.8M-47.0%	$7.2M-53.5%	$15.5M-54.9%	$34.4M+16.1%	$29.7M+10.2%	$26.9M+39.4%	$19.3M+50.2%	$12.9M+48.1%	$8.7M
SG&A Expenses	$2.3M-24.6%	$3.0M-31.8%	$4.4M-63.2%	$11.9M-33.2%	$17.8M+18.6%	$15.0M-7.6%	$16.3M+51.5%	$10.7M+28.2%	$8.4M+113.4%	$3.9M
Operating Income	-$39K-125.3%	$153K+106.0%	-$2.5M-270.4%	$1.5M+117.1%	-$8.7M+81.8%	-$47.8M-30.1%	-$36.8M-467.5%	$10.0M+141.7%	-$24.0M+21.5%	-$30.5M
EBITDA	-$16K-108.1%	$204K+109.5%	-$2.2M-165.5%	$3.3M+166.6%	-$4.9M+88.8%	-$44.1M-30.6%	-$33.8M-402.6%	$11.2M+148.4%	-$23.1M+23.0%	-$30.0M
Interest Expense	$31K-53.0%	$66K+131.1%	$28K-97.9%	$1.4M-76.1%	$5.7M	N/A	N/A	N/A	N/A	N/A
Income Tax	$3K-68.3%	$9K-56.8%	$21K+130.0%	$9K-82.6%	$52K+633.3%	$7K+313.5%	$2K+679.1%	$220-72.5%	$800	$0
Net Income	-$78K-223.0%	$64K+102.4%	-$2.6M-604.1%	$515K+103.7%	-$13.9M+70.7%	-$47.4M-28.6%	-$36.8M-463.1%	$10.1M+142.9%	-$23.7M+22.9%	-$30.7M
EPS (Basic)	$0.00	$0.00+100.0%	$0.00-600.0%	$0.00+102.0%	-$0.01+75.0%	-$0.02-100.0%	-$0.01-433.3%	$0.00+110.0%	-$0.030.0%	-$0.03
EPS (Diluted)	$0.00	$0.00+100.0%	$0.00-600.0%	$0.00	-$0.01+75.0%	-$0.02	-$0.01-433.3%	$0.00	-$0.030.0%	-$0.03
Diluted Shares (Avg)	4.84B-0.4%	4.86B+0.4%	4.84B+5.3%	4.59B	3.30B+7.2%	3.08B	3.16B+98.3%	1.59B	899M-1.5%	913M

Metric	Q4'2520-F	Q4'2420-F	Q4'2310-K	Q4'2210-K	Q4'2110-K	Q2'2110-Q	Q4'2010-K	Q3'2010-Q
EPS (Basic)	N/A	N/A	N/A	N/A	N/A	N/A	-$0.01	N/A
EPS (Diluted)	N/A	N/A	N/A	N/A	N/A	N/A	-$0.01	N/A

Not reported in any period shown, so not listed: Revenue, Cost of Revenue, Gross Profit, R&D Expenses, SG&A Expenses, Operating Income, EBITDA, Interest Expense, Income Tax, Net Income, Diluted Shares (Avg).

CTKYY Balance Sheet

CTKYY quarterly balance sheet

Metric	FY2520-F	FY2420-F	FY2320-F	FY2210-K	FY2110-K	FY2010-K	FY1910-K	FY1810-K	FY1710-K	FY1610-K
Total Assets	$6.9M-23.7%	$9.0M-3.2%	$9.3M-56.6%	$21.4M-62.1%	$56.4M-41.8%	$96.9M-4.8%	$101.8M-14.0%	$118.4M+156.0%	$46.3M	N/A
Current Assets	$6.1M-27.9%	$8.5M+2.7%	$8.2M-57.1%	$19.2M-62.2%	$50.8M-25.5%	$68.2M-28.7%	$95.6M-15.5%	$113.2M+158.8%	$43.7M	N/A
Cash & Equivalents	$3.5M-15.2%	$4.1M+69.1%	$2.4M-74.9%	$9.7M-46.7%	$18.2M-26.1%	$24.7M-58.8%	$59.9M-29.4%	$84.9M+217.6%	$26.7M-34.9%	$41.1M
Short-Term Investments	$0	$0-100.0%	$50K0.0%	$50K0.0%	$50K0.0%	$50K-91.2%	$572K	$0	$0	$0
Accounts Receivable	$1.8M-37.0%	$2.9M+22.5%	$2.3M-52.8%	$4.9M-77.0%	$21.5M-23.6%	$28.1M+3.2%	$27.3M+16.6%	$23.4M+112.9%	$11.0M+338.1%	$2.5M
Long-Term Investments	$259K+2.3%	$253K-1.8%	$258K-6.7%	$277K-11.8%	$314K+2.3%	$307K	$0-100.0%	$500K	$0	$0
Total Liabilities	$7.0M-23.1%	$9.1M-5.9%	$9.7M-52.3%	$20.3M-67.6%	$62.4M-43.6%	$110.7M+75.9%	$62.9M+84.4%	$34.1M-80.1%	$171.2M	N/A
Current Liabilities	$6.8M-24.8%	$9.1M-3.5%	$9.4M-51.8%	$19.6M-68.5%	$62.0M-43.8%	$110.2M+76.9%	$62.3M+87.5%	$33.2M+124.4%	$14.8M	N/A
Non-Current Liabilities	$156K	$0-100.0%	$238K-65.9%	$699K+63.8%	$426K-7.2%	$459K-22.9%	$596K-32.2%	$878K-99.4%	$156.4M	N/A
Total Equity	-$148K-26.6%	-$117K+70.0%	-$390K-134.5%	$1.1M+118.8%	-$6.0M+56.5%	-$13.8M-135.5%	$38.9M-53.9%	$84.3M+167.5%	-$124.9M-24.2%	-$100.6M
Retained Earnings	-$216.9M0.0%	-$216.9M0.0%	-$216.9M-1.2%	-$214.3M+0.2%	-$214.8M-6.9%	-$201.0M-30.8%	-$153.6M-31.6%	-$116.8M+8.0%	-$126.9M	N/A

Metric	Q4'2520-F	Q4'2420-F	Q4'2310-K	Q4'2210-K	Q4'2110-K	Q2'2110-Q	Q4'2010-K	Q3'2010-Q
Total Assets	$6.9M-23.7%	$9.0M-3.2%	$9.3M-56.6%	$21.4M-62.1%	$56.4M-41.8%	$87.5M	$96.9M-4.8%	$108.3M
Current Assets	$6.1M-27.9%	$8.5M+2.7%	$8.2M-57.1%	$19.2M-62.2%	$50.8M-25.5%	$79.4M	$68.2M-28.7%	$98.9M
Cash & Equivalents	$3.5M-15.2%	$4.1M+69.1%	$2.4M-74.9%	$9.7M-46.7%	$18.2M-26.1%	$35.7M	$24.7M-58.8%	$58.5M
Short-Term Investments	$0	$0-100.0%	$50K0.0%	$50K0.0%	$50K0.0%	$50K	$50K-91.2%	$550K
Accounts Receivable	$1.8M-37.0%	$2.9M+22.5%	$2.3M-52.8%	$4.9M-77.0%	$21.5M-23.6%	$31.5M	$28.1M+3.2%	$29.1M
Long-Term Investments	$259K+2.3%	$253K-1.8%	$258K-6.7%	$277K-11.8%	$314K+2.3%	$620K	$307K	$147K
Total Liabilities	$7.0M-23.1%	$9.1M-5.9%	$9.7M-52.3%	$20.3M-67.6%	$62.4M-43.6%	$101.5M	$110.7M+75.9%	$102.8M
Current Liabilities	$6.8M-24.8%	$9.1M-3.5%	$9.4M-51.8%	$19.6M-68.5%	$62.0M-43.8%	$100.9M	$110.2M+76.9%	$102.3M
Non-Current Liabilities	$156K	$0-100.0%	$238K-65.9%	$699K+63.8%	$426K-7.2%	$622K	$459K-22.9%	$493K
Total Equity	-$148K-26.6%	-$117K+70.0%	-$390K-134.5%	$1.1M+118.8%	-$6.0M+56.5%	-$14.0M	-$13.8M-135.5%	$5.5M
Retained Earnings	-$216.9M0.0%	-$216.9M0.0%	-$216.9M-1.2%	-$214.3M+0.2%	-$214.8M-6.9%	-$213.1M	-$201.0M-30.8%	-$182.2M

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

CTKYY Cash Flow Statement

CTKYY quarterly cash flow statement

Metric	FY2520-F	FY2420-F	FY2320-F	FY2210-K	FY2110-K	FY2010-K	FY1910-K	FY1810-K	FY1710-K	FY1610-K
Operating Cash Flow	-$77K+73.0%	-$287K+95.6%	-$6.6M-604.2%	$1.3M+102.5%	-$51.0M-5892.7%	-$852K+94.6%	-$15.7M-167.8%	$23.1M+182.4%	-$28.0M+1.4%	-$28.4M
Depreciation & Amortization	$22K-55.9%	$51K-86.7%	$380K-78.9%	$1.8M-52.2%	$3.8M+0.1%	$3.8M+25.4%	$3.0M+160.5%	$1.2M+28.3%	$899K+61.8%	$556K
Stock-Based Compensation	$38K-72.0%	$135K-80.9%	$705K-61.3%	$1.8M-51.0%	$3.7M-30.4%	$5.3M+45.7%	$3.7M+55.2%	$2.4M+169.2%	$877K+20.5%	$727K
Capital Expenditures	$60K	N/A	$76K+5808.7%	$1K-99.9%	$1.5M-49.8%	$2.9M-38.7%	$4.8M+34.7%	$3.5M+137.2%	$1.5M+96.3%	$759K
Free Cash Flow	-$138K	N/A	-$6.6M-610.6%	$1.3M+102.5%	-$52.5M-1292.2%	-$3.8M+81.5%	-$20.4M-204.4%	$19.6M+166.3%	-$29.5M-1.2%	-$29.2M
Investing Cash Flow	-$45K-155.8%	$81K-91.6%	$960K+84.0%	$522K+129.3%	-$1.8M+32.7%	-$2.6M+50.4%	-$5.3M-45.9%	-$3.7M-107.9%	-$1.8M-111.5%	-$831K
Financing Cash Flow	-$490K-126.7%	$1.8M+193.6%	-$2.0M+83.2%	-$11.6M-155.6%	$20.9M+345.9%	-$8.5M-123.9%	-$3.8M-109.5%	$40.2M+178.9%	$14.4M-71.9%	$51.3M
Share Buybacks	N/A	N/A	N/A	N/A	$1.3M-86.1%	$9.5M-22.8%	$12.3M+391.5%	$2.5M+72.2%	$1.5M	N/A

Metric	Q4'2520-F	Q4'2420-F	Q4'2310-K	Q4'2210-K	Q4'2110-K	Q2'2110-Q	Q4'2010-K	Q3'2010-Q
Operating Cash Flow	N/A	N/A	N/A	N/A	N/A	N/A	-$6.8M-310.8%	-$14.4M
Depreciation & Amortization	N/A	N/A	N/A	N/A	N/A	N/A	$1.0M+13.4%	$1.2M
Capital Expenditures	N/A	N/A	N/A	N/A	N/A	N/A	$682K+2.8%	$730K
Free Cash Flow	N/A	N/A	N/A	N/A	N/A	N/A	-$7.5M-391.7%	-$15.1M
Investing Cash Flow	N/A	N/A	N/A	N/A	N/A	N/A	-$282K+77.1%	$12.3M
Financing Cash Flow	N/A	N/A	N/A	N/A	N/A	N/A	-$5.6M-487.4%	-$2.2M
Share Buybacks	N/A	N/A	N/A	N/A	N/A	N/A	$1.3M-46.9%	$2.3M

Not reported in any period shown, so not listed: Stock-Based Compensation, Dividends Paid.

CTKYY 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.

CTKYY quarterly financial ratios

Metric	FY2520-F	FY2420-F	FY2320-F	FY2210-K	FY2110-K	FY2010-K	FY1910-K	FY1810-K	FY1710-K	FY1610-K
Gross Margin	70.2%-0.9pp	71.1%-10.0pp	81.1%-3.3pp	84.4%-3.5pp	87.9%-6.6pp	94.5%+3.1pp	91.4%+2.5pp	88.9%+42.7pp	46.2%+128.9pp	-82.8%
Operating Margin	-0.2%-0.7pp	0.5%+8.4pp	-7.9%-9.7pp	1.8%+5.0pp	-3.2%+7.6pp	-10.8%+9.8pp	-20.7%-28.1pp	7.5%+71.7pp	-64.2%	-276.8%
Net Margin	-0.4%-0.6pp	0.2%+8.3pp	-8.1%-8.7pp	0.6%+5.7pp	-5.1%+5.6pp	-10.7%+10.0pp	-20.7%-28.3pp	7.6%+70.9pp	-63.4%	-278.4%
Return on Equity	N/A	N/A	N/A	45.5%	N/A	N/A	-94.7%-106.7pp	12.0%	N/A	N/A
Return on Assets	-1.1%-1.9pp	0.7%+28.7pp	-28.0%-30.4pp	2.4%+27.0pp	-24.6%+24.3pp	-48.9%-12.7pp	-36.2%-44.8pp	8.6%+59.7pp	-51.1%	N/A
Current Ratio	0.890.0x	0.93+0.1x	0.87-0.1x	0.98+0.2x	0.82+0.2x	0.62-0.9x	1.53-1.9x	3.40+0.5x	2.95	N/A
Debt-to-Equity	N/A	N/A	N/A	17.91	N/A	N/A	1.62+1.2x	0.40	N/A	N/A
Asset Turnover	3.17-0.2x	3.37-0.1x	3.45-0.5x	3.92-0.9x	4.82+0.3x	4.56+2.8x	1.75+0.6x	1.13+0.3x	0.81	N/A
FCF Margin	-0.6%	N/A	-20.8%-22.3pp	1.6%+20.8pp	-19.3%-18.4pp	-0.9%+10.6pp	-11.5%-26.1pp	14.6%+93.7pp	-79.1%	-264.7%

Metric	Q4'2520-F	Q4'2420-F	Q4'2310-K	Q4'2210-K	Q4'2110-K	Q2'2110-Q	Q4'2010-K	Q3'2010-Q
Current Ratio	0.890.0x	0.93+0.1x	0.87-0.1x	0.98+0.2x	0.82+0.2x	0.79	0.62-0.9x	0.97
Debt-to-Equity	N/A	N/A	N/A	17.91	N/A	N/A	N/A	18.53

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

Note: Shareholder equity is negative (-$148K), which causes debt-to-equity and return on equity ratios to appear negative or not meaningful. This can occur from accumulated losses or large share buyback programs.

Note: The current ratio is below 1.0 (0.89), indicating current liabilities exceed current assets, which may suggest potential short-term liquidity concerns.

Where COOTEK INC Ranks

Frequently Asked Questions

What is COOTEK INC's annual revenue?

COOTEK INC (CTKYY) reported $21.7M in total revenue for fiscal year 2025. This represents a -28.4% change compared to the previous fiscal year. Revenue measures the total income earned from the company's primary business operations before any expenses are deducted.

How fast is COOTEK INC's revenue growing?

COOTEK INC (CTKYY) revenue declined by 28.4% year-over-year, from $30.3M to $21.7M in fiscal year 2025.

Is COOTEK INC profitable?

No, COOTEK INC (CTKYY) reported a net income of -$78K in fiscal year 2025, with a net profit margin of -0.4%.

What is COOTEK INC's EBITDA?

COOTEK INC (CTKYY) had EBITDA of -$16K in fiscal year 2025, measuring earnings before interest, taxes, depreciation, and amortization.

What is COOTEK INC's gross margin?

COOTEK INC (CTKYY) had a gross margin of 70.2% in fiscal year 2025, indicating the percentage of revenue retained after direct costs of goods sold.

What is COOTEK INC's operating margin?

COOTEK INC (CTKYY) had an operating margin of -0.2% in fiscal year 2025, reflecting the profitability of core business operations before interest and taxes.

What is COOTEK INC's net profit margin?

COOTEK INC (CTKYY) had a net profit margin of -0.4% in fiscal year 2025, representing the share of revenue converted into profit after all expenses.

What is COOTEK INC's free cash flow?

COOTEK INC (CTKYY) recorded an outflow of $138K in free cash flow during fiscal year 2025. Free cash flow represents the cash a company generates after accounting for capital expenditures, and is widely used to assess financial flexibility and shareholder value.

What is COOTEK INC's operating cash flow?

COOTEK INC (CTKYY) recorded an outflow of $77K in operating cash flow during fiscal year 2025, representing cash used by core business activities.

What are COOTEK INC's total assets?

COOTEK INC (CTKYY) had $6.9M in total assets as of fiscal year 2025, including both current and long-term assets.

What are COOTEK INC's capital expenditures?

COOTEK INC (CTKYY) invested $60K in capital expenditures during fiscal year 2025, funding long-term assets and infrastructure.

How much does COOTEK INC spend on research and development?

COOTEK INC (CTKYY) invested $3.5M in research and development during fiscal year 2025.

What is COOTEK INC's current ratio?

COOTEK INC (CTKYY) had a current ratio of 0.89 as of fiscal year 2025, which is below 1.0, which may suggest potential liquidity concerns.

What is COOTEK INC's return on assets (ROA)?

COOTEK INC (CTKYY) had a return on assets of -1.1% for fiscal year 2025, measuring how efficiently the company uses its assets to generate profit.

Why is COOTEK INC's debt-to-equity ratio negative or not reported?

COOTEK INC (CTKYY) has negative shareholder equity of -$148K as of fiscal year 2025, so no debt-to-equity ratio is reported: dividing debt by equity that is not positive produces a number that cannot be read as leverage. This can occur when accumulated losses exceed invested capital, or after large share buyback programs. Other solvency metrics like the current ratio or interest coverage may be more informative.

What is COOTEK INC's Altman Z-Score?

COOTEK INC (CTKYY) has an Altman Z-Score of -41.22, placing it in the Distress Zone (elevated bankruptcy risk). The Z-Score combines five financial ratios (working capital, retained earnings, EBIT, market capitalization, and revenue relative to total assets) to predict the likelihood of bankruptcy. Scores above 2.99 indicate financial safety while scores below 1.81 suggest financial distress. Learn more in our complete guide to financial health indicators.

What is COOTEK INC's Piotroski F-Score?

COOTEK INC (CTKYY) has a Piotroski F-Score of 1 out of 7 computable signals; 2 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 COOTEK INC's earnings high quality?

COOTEK INC (CTKYY) reported a net loss of $78K while operations used $77K 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 COOTEK INC cover its interest payments?

COOTEK INC (CTKYY) reported an operating loss of $39K against $31K 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.