Times interest earned ratio
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.
