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Interest coverage ratio or Times interest earned (TIE)


The calculator is used to calculate the coverage of bills by profit before paying off the tax bill.
In the Profit field, enter profit (operating) before tax and interest are subtracted.
In the Interest field, enter the value of the interest paid.



Interest coverage ratio - calculator




Profit
Interest










Usefull information
Interest coverage ratio or Times interest earned (TIE) – the essence of this indicator is to assess the risk of a situation in which the enterprise will not have cash to pay interest. The interest coverage ratio is as follows:

\begin{align}TIE = \frac{net \ profit + income \ tax + interest}{interest \ and \ bank \ charges}\end{align}

You can also come across a different formula for this indicator:

\begin{align}TIE = \frac{EBIT (operational \ profit)}{interest}\end{align}

Banks and financial analysts use this indicator as the simplest rule to assess the financial condition of a company.






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