Time Interest Earned Ratio Calculator

Formula

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

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

Where:

Time Interest Earned Ratio (TIER): The ratio that measures a company's ability to meet its interest obligations based on its earnings.
Total EBITDA: Earnings before interest, taxes, depreciation, and amortization.
Total Interest Expense: The total amount of interest a company must pay on its debt.

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.