Times Interest Earned Ratio Calculator

EBIT (Earnings before interest and taxes):
Total Interest:



TIE Ratio:

Times Interest Earned Ratio Calculator

A Times Interest Earned Ratio Calculator is a tool used to evaluate a company’s ability to meet its interest payment obligations. It measures the company’s ability to generate enough operating income to cover its interest expenses.

Formula

The formula for calculating the Times Interest Earned Ratio is: Times Interest Earned Ratio = Earnings Before Interest and Taxes (EBIT) / Interest Expense.

Example

For example, if a company has an EBIT of $500,000 and an interest expense of $100,000, the Times Interest Earned Ratio would be: Times Interest Earned Ratio = $500,000 / $100,000 = 5.

In this case, the company’s Times Interest Earned Ratio is 5, indicating that its operating income is sufficient to cover its interest expenses 5 times over. A higher ratio signifies better financial health and a lower risk of defaulting on interest payments.