Difference between revisions of "Times interest earned ratio"
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:[[Times interest earned ratio]]. A debt management ratio indicating the degree of risk to lenders that a company will default on its interest payments. Also called [[interest coverage ratio]]. | :[[Times interest earned ratio]]. A debt management ratio indicating the degree of risk to lenders that a company will default on its interest payments. Also called [[interest coverage ratio]]. | ||
According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]], | According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]], | ||
| − | :[[Interest coverage ratio]]. Also called the times interest-earned (TIE) ratio; determined by dividing earnings before interest and taxes by the interest expense. | + | :[[Interest coverage ratio]]. Also called the times interest-earned (TIE) ratio; determined by dividing [[operating income|earnings before interest and taxes]] by the interest expense. |
==Related concepts== | ==Related concepts== | ||
Latest revision as of 03:27, 9 November 2019
Times interest earned ratio (or, simply, times interest earned; hereinafter, the Ratio) is a debt management ratio indicating the degree of risk to lenders that a company will default on its interest payments. Also called interest coverage ratio.
Definitions
According to College Accounting: A Practical Approach by Slater (13th edition),
- Times interest earned ratio. A debt management ratio indicating the degree of risk to lenders that a company will default on its interest payments. Also called interest coverage ratio.
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Interest coverage ratio. Also called the times interest-earned (TIE) ratio; determined by dividing earnings before interest and taxes by the interest expense.
Related concepts
- Accounting (alternatively known as accountancy) is management of financial data, information, and knowledge about financial transactions of legal entities. Accountancy tends to include bookkeeping and, depending on a particilar enterprise, may also include quatitative analysis of financial data in the bookkeeping system and/or business intelligence.
