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 ($)
- E is the total interest expense ($)
To calculate the time interest earned ratio, divide the total EBITDA by 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 = ?
