Times Interest Earned Calculator
Measure how many times earnings before interest and taxes (EBIT) cover interest expense. Use amounts from the same reporting period, currency and scale.
Your coverage result
- Times interest earned
- Interest coverage percentage
- EBIT
- Interest expense
- EBIT after covering interest
- Prior-period coverage
- Change vs. prior period
- EBIT required for target
- EBIT gap to target (positive means shortfall)
This accounting ratio does not replace a cash-flow forecast, covenant definition or credit assessment.
Times interest earned formula
Times interest earned (TIE) = EBIT ÷ interest expense. The same calculation is commonly called the interest coverage ratio. EBIT and interest expense must cover the same accounting period and use the same currency and scale.
Example: EBIT of US$300,000 divided by US$60,000 of interest expense equals 5.00×, or 500%. EBIT exceeds interest expense by US$240,000. If the target is 6.00×, required EBIT is US$360,000 and the shortfall is US$60,000.
How to interpret interest coverage
A 5.00× result means accounting earnings before interest and tax are five times the period’s interest expense. A negative ratio means EBIT is negative; a zero interest expense makes the ratio undefined. Higher coverage generally indicates more room to absorb earnings volatility, but there is no universal safe threshold.
Limits and assumptions
- Use EBIT, not EBITDA, unless a lender or analyst explicitly defines a different coverage covenant.
- Use interest expense for the same period as EBIT. Confirm whether capitalized interest, lease interest and nonrecurring finance costs belong in your analysis.
- The currency selector changes display formatting only and performs no exchange-rate conversion.
- The optional target is a scenario, not a recommendation. Actual credit decisions also depend on cash flow, debt maturities, covenants, liquidity and earnings quality.
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