# Times Interest Earned Ratio Calculator (TIE)

URL: https://speedycalculator.com/calculators/finance/times-interest-earned/
Last updated: 2026-10-25

> The times interest earned ratio calculator divides EBIT by total interest expense to show how many times a company could pay its interest from operating profit.

## Inputs

- EBIT
- Total interest expense

## Results

- Times interest earned (TIE) ratio
- EBIT cushion above interest

## Formula

```
TIE = earnings before interest and taxes ÷ total interest expense
```

## Explanation

The TIE ratio is a solvency measure: a company with a TIE of 6 could pay its interest six times over. Lenders often set minimum TIE covenants of 2–3×.

### How to use the Times Interest Earned Ratio Calculator

- **EBIT**
- **Total interest expense**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter EBIT and total interest expense.

### Tips

- Check whether rates are quoted annually, semi-annually or per period.
- Bond prices and yields move in opposite directions – a higher yield means a lower price.
- Use the bond's clean price (without accrued interest) for yield calculations.
- Credit ratios are most useful when tracked over several years.

### Common mistakes to avoid

- Confusing the coupon rate with the yield.
- Using the face value instead of the market price.
- Forgetting that callable bonds may be redeemed before maturity.

### Inputs explained

FieldWhat to enterEBITAmount in your currencyTotal interest expenseAmount in your currency

### What each result means

- **Times interest earned (TIE) ratio** = [EBIT]÷[Total interest expense]
- **EBIT cushion above interest** = [EBIT] - [Total interest expense]

### Example values

How the main result changes when **EBIT** changes and everything else stays at the example values above:

EBITTimes interest earned (TIE) ratio (×)900,00031,350,0004.51,800,00062,250,0007.52,700,00093,600,00012

## Worked example

Inputs — EBIT: $1,800,000; Total interest expense: $300,000.

Results — **Times interest earned (TIE) ratio = 6 ×**; EBIT cushion above interest = $1,500,000.00.

## FAQ

**What is a good TIE ratio?**
Above 2.5–3 is generally acceptable.

**Is TIE the same as the interest coverage ratio?**
Yes.

**What does a TIE below 1 mean?**
The company isn't earning enough to pay its interest.

**What formula does the Times Interest Earned Ratio Calculator use?**
TIE = earnings before interest and taxes ÷ total interest expense.


## Sources

- [Corporate Finance Institute – financial ratios](https://corporatefinanceinstitute.com/)