Time Interest Earned Ratio Calculator

Calculate Time Interest Earned Ratio



Formula

The formula to calculate the Time Interest Earned Ratio (TIER) is:

\[ TIER = \frac{EBITDA}{E} \]

Where:

Definitions

Example

Let's say the total EBITDA is $50,000 and the total interest expense is $10,000. Using the formula:

\[ TIER = \frac{50000}{10000} \]

We get:

\[ TIER = 5 \]

So, the time interest earned ratio is 5, meaning the company earns 5 times its interest expense.