Enter the total EBITDA ($) and the total interest expense ($) into the Time Interest Earned Ratio Calculator. The calculator will evaluate and display the Time Interest Earned Ratio.
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Time Interest Earned Ratio Formula
The following formula is used to calculate the Time Interest Earned Ratio.
TIER = EBITDA / E
- Where TIER is the Time Interest Earned Ratio ( )
- EBITDA is the total EBITDA ($)
- E is the total interest expense ($)
How to Calculate Time Interest Earned Ratio?
The following example problems outline how to calculate Time Interest Earned Ratio.
Example Problem #1:
- First, determine the total EBITDA ($).
- The total EBITDA ($) is given as: 5000.
- Next, determine the total interest expense ($).
- The total interest expense ($) is provided as: 3000.
- Finally, calculate the Time Interest Earned Ratio using the equation above:
TIER = EBITDA / E
The values given above are inserted into the equation below and the solution is calculated:
TIER = 5000 / 3000 = 1.66 ( )
Example Problem #2:
For this problem, the variables required are provided below:
total EBITDA ($) = 6000
total interest expense ($) = 8000
Test your knowledge using the equation and check your answer with the calculator above.
TIER = EBITDA / E = ?
