liquidity-leverage

calculate_interest_coverage

Read-onlyIdempotent

Calculate the interest coverage ratio: earnings before interest and taxes divided by interest expense — how many times a company can cover its interest obligations from operating earnings. Formula: Interest Coverage = EBIT / Interest Expense. WHEN TO USE: Use to assess credit risk and debt-service capacity; below 1.5 is typically a distress signal, above 3 is comfortable for most industries. WHEN NOT TO USE: Do NOT use for companies with significant non-cash EBIT distortions (large depreciation) — consider EBITDA-based coverage for those. BEHAVIOUR: pure deterministic calculation — no side effects, no network or storage access; idempotent and non-destructive; identical inputs always produce identical outputs. Division by zero or non-finite inputs returns an explicit error instead of a number. RETURNS: JSON object { interest_coverage: number (e.g. 4.2 = 4.2x), inputs }. PARAMETERS: ebit (required): Earnings before interest and taxes (operating income), e.g. 420000. May be negative. interest_expense (required): Annual interest expense, e.g. 100000. Must be > 0.

Input Schema

TableJSON Schema

Name	Required	Description	Default
`ebit`	Yes	Earnings before interest and taxes (operating income), e.g. 420000. May be negative.
`interest_expense`	Yes	Annual interest expense, e.g. 100000. Must be > 0.

TDQS

A4.7/5.0

Behavior5/5

Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

The description discloses pure deterministic behavior with no side effects, no network or storage access, idempotence, and identical outputs for identical inputs. It also specifies the division-by-zero and non-finite input error handling, which meaningfully extends the readOnly and idempotent hints already provided by annotations.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Conciseness5/5

Is the description appropriately sized, front-loaded, and free of redundancy?

The description is well-organized with clear labeled sections: purpose, formula, usage guidance, exclusions, behavior, returns, and parameters. Every sentence adds useful information, and the core purpose is front-loaded before the more detailed guidance.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Completeness5/5

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

For a simple two-parameter calculation with no output schema, the description is fully complete: it explains the formula, the domain context, when to use and avoid it, the exact return shape, and edge-case error behavior. An agent has all the information needed to select and invoke the tool correctly.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Parameters3/5

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema description coverage is 100%, with both parameters already documented in the schema. The description adds value through realistic examples and clarifies the range semantics (e.g., ebit may be negative, interest_expense must be > 0), but these are largely restatements of the schema, so it does not materially go beyond it.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Purpose5/5

Does the description clearly state what the tool does and how it differs from similar tools?

The description states a specific verb and resource: calculates the interest coverage ratio, gives the exact formula (EBIT / Interest Expense), and explains the meaning in plain terms. The threshold context and sibling names for other ratios make it clear this is a distinct financial-ratio calculation.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Usage Guidelines5/5

Does the description explain when to use this tool, when not to, or what alternatives exist?

The description explicitly provides WHEN TO USE guidance with concrete thresholds (below 1.5 distress, above 3 comfortable) and WHEN NOT TO USE guidance with an alternative (EBITDA-based coverage for non-cash EBIT distortions). This clearly differentiates when to call this tool versus alternatives.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.

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TDQS

A4.7/5.0

Disambiguation5/5

Each tool computes a distinct, named financial ratio with a unique formula; even the three liquidity ratios are carefully differentiated by strictness and explicit WHEN TO USE/NOT guidance. There is no practical risk of an agent selecting the wrong tool.

Naming Consistency5/5

All tools follow the identical calculate_<metric> pattern in snake_case, making the naming scheme highly predictable. The only minor variation is calculate_defensive_interval instead of ..._ratio, but it still fits the same verb-prefixed convention.

Tool Count5/5

Eight tools is a well-scoped set for a liquidity and leverage ratio calculator: four liquidity measures and four leverage measures, with no redundant or filler tools. The count is manageable for an agent to choose from without being over-conservative.

Completeness5/5

The tool surface covers the standard liquidity ratios (current, quick, cash, defensive interval) and the core leverage/solvency ratios (debt-to-assets, debt-to-equity, equity multiplier, interest coverage). Since each tool is a pure calculation with no stateful workflow, there are no dead-end operations or lifecycle gaps.

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