# Times Interest Earned Ratio Calculator

###### Updated: Jun 10, 2018

Times Interest Earned Ratio Calculator is a tool to evaluate TIE by dividing the income before interest and taxes (EBIT) by the interest expense

Times Interest Earned Ratio:
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Background Information

What does Interest Earned Ratio mean?
Times interest earned or (TIE), also known as interest coverage ratio. It is the measure of a firm’s capacity to honor its debt payments. It may be calculated as either EBIT or as EBITDA when divided by the total interest payable.
Formula
Times interest earned = EBIT/I = Number of Times
Example

Lee’s statement shows $50,000 in income before interest expenses and taxes. The firm’s overall interest and debt service for a year are amounted to$5,000.

According, to the formula, Times interest earned is:-

• $50,000 /$5,000 = 10 Times

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