MBATricks

Tips and Tricks about my MBA experience

Finance :: Leverage Ratio :: Times Interest Earned (TIE)

This ratio helps to see if the company can pay the interests of its loans.

 

TIE = EBIT / Interests

 

The bigger the TIE, the more the company can cover the interests of its debts.

 

The EBIT and the Interests are taken from the company’s Balance Sheet.

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