Times Interest Earned Ratio Calculator

Formula

To calculate the Times Interest Earned Ratio (TIE):

\[ TIE = \frac{EBIT}{IE} \]

Where:

\(TIE\) is the times interest earned ratio
\(EBIT\) is the earnings before interest and taxes
\(IE\) is the interest expense

What is Times Interest Earned Ratio?

The times interest earned ratio is a financial metric used to determine how easily a company can pay interest on its outstanding debt. It is calculated by dividing the company's EBIT by its interest expense[^1^][^2^].

Example Calculation 1

Let's assume the following values:

EBIT = 100,000
Interest Expense = 20,000

Using the formula:

\[ TIE = \frac{100,000}{20,000} = 5.00 \]

The times interest earned ratio is 5.00.

Example Calculation 2

Let's assume the following values:

EBIT = 150,000
Interest Expense = 30,000

Using the formula:

\[ TIE = \frac{150,000}{30,000} = 5.00 \]

The times interest earned ratio is 5.00.