What does 'Times Interest Earned  TIE' mean
Times interest earned (TIE) is a metric used to measure a company's ability to meet its debt obligations. It is calculated by taking a company's earnings before interest and taxes (EBIT) and dividing it by the total interest payable on bonds and other contractual debt. It is usually quoted as a ratio and indicates how many times a company can cover its interest charges on a pretax basis. Failing to meet these obligations could force a company into bankruptcy.
Also referred to as "interest coverage ratio" and "fixedcharged coverage."
BREAKING DOWN 'Times Interest Earned  TIE'
Ensuring interest payments to debt holders and preventing bankruptcy depends mainly on a company's ability to sustain earnings. However, a high ratio can indicate that a company has an undesirable lack of debt or is paying down too much debt with earnings that could be used for other projects. The rationale is that a company would yield greater returns by investing its earnings into other projects and borrowing at a lower cost of capital than what it is currently paying to meet its debt obligations.

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What measures should a company take if its times interest earned ratio is too high?
Find out why and when a company's times interest earned ratio can be considered too high and what measures can be taken to ... Read Answer >> 
What is the difference between interest coverage ratio and TIE?
Read about the times interest earned, also known as the interest coverage ratio. Find out why this is an important ratio ... Read Answer >> 
What is a good interest coverage ratio?
Learn the importance of the interest coverage ratio, one of the primary debt ratios analysts use to evaluate a company's ... Read Answer >> 
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Learn about some of the financial leverage and profitability ratios that investors can analyze to supplement examining the ... Read Answer >> 
What are the most common leverage ratios for evaluating a company?
Learn more about some of the most common leverage ratios used by traders to determine whether a company is using debt in ... Read Answer >> 
What does a high times interest earned ratio signify with regard to a company's future?
Learn how the times interest earned ratio affects the perception of solvency of a company, and what a high ratio can mean ... Read Answer >>