Last updated October 10, 2026 · Report an error
Times Interest Earned (TIE) is the traditional accounting-textbook name for a company's ability to cover its interest payments from operating earnings — the same underlying relationship as the Interest Coverage Ratio, under its more classic name.
How it works
Enter EBIT (earnings before interest and taxes) and interest expense, and the calculator applies TIE = EBIT ÷ Interest Expense.
- Enter eBIT ($) — earnings before interest and taxes.
- Enter interest expense ($).
- Click Calculate to see your results.
Examples
Comfortable debt-servicing capacity
A company with $200,000 of EBIT and $40,000 of interest expense has a TIE of 5.0 — its operating earnings cover interest payments five times over.
Who should use it
- Assessing a company's debt-servicing capacity in traditional accounting/credit analysis coursework.
- Credit analysis and lending decisions.
Industry applications
- Corporate finance and credit analysis
- Accounting education and credit risk assessment
Advantages
- Simple, widely-used solvency and credit-risk indicator with a long history in accounting education.
- Easy to calculate from figures already on an income statement.
Limitations
- A single-period snapshot can be misleading for businesses with volatile or seasonal earnings.
Common mistakes to avoid
- Using net income instead of EBIT, which already has interest subtracted and would double-count its effect.
- Judging a single period's TIE without checking whether the company's earnings are typically stable or cyclical.
Best practices
- Always use EBIT (not net income) as the numerator for this ratio.
- Track the trend over multiple periods, especially for businesses with cyclical or seasonal earnings.
Tips
- This is mathematically identical to the Interest Coverage Ratio Calculator — use whichever name matches the terminology in your textbook, course, or report.
Frequently asked questions
Yes, with no signup and no limit on how many calculations you run.
Yes — they're the identical formula (EBIT ÷ Interest Expense) under two different names. "Times Interest Earned" is the traditional term used in many accounting textbooks; "Interest Coverage Ratio" is the more common term in modern finance and investing contexts.
Commonly, a ratio below 1.5-2 is considered a warning sign in many industries, though the safe threshold varies by industry and how stable the company's earnings typically are.
EBIT isolates operating performance before financing costs and taxes, making it the appropriate figure to compare directly against interest expense — net income already has interest subtracted out, so it wouldn't answer the same question.