Times interest earned ratio

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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.

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