What financial metric shows how many times a company can cover its interest obligations?

Interest cover is a financial metric that indicates how many times a company can cover its interest obligations with its earnings before interest and taxes (EBIT). It is calculated by dividing EBIT by the interest expenses incurred during a specific period. This ratio is crucial for assessing a company's ability to meet its debt obligations, making it a key indicator of financial health and risk.

A high interest cover indicates that a company generates sufficient earnings to easily pay its interest expenses, suggesting a lower risk of default. Conversely, a low interest cover can raise red flags for investors and creditors, indicating that the company may struggle to meet its debt commitments, which could lead to financial distress.

In contrast, the other options do not specifically measure a company's ability to pay interest. The debt to equity ratio assesses financial leverage but doesn't directly relate to interest payments. Earnings per share focuses on profitability per share but not on interest obligations, while gross margin evaluates the difference between revenue and the cost of goods sold, which is unrelated to interest coverage. Thus, interest cover is the most relevant choice for determining how well a company can manage its interest responsibilities.