Times Interest Earned Ratio Interpretation
Interpretation of the Fixed-Charge Coverage Ratio. Average Collection Period. Times Interest Earned Ratio Formula Examples With Excel Template And unlike net income it is difficult to play around with this variation of earnings per share ratio. . EB optimal capital structure PG HA Times interest earned TIE EBIT Interest expense Ability to meet interest payments as they mature. The formula used for the calculation of interest coverage ratio is-. The bank could have additional interest expenses on the income statement but well keep this example simple. For example if a companys earnings before taxes and interest amount to 50000 and its total interest payment requirements equal 25000 then the companys interest coverage ratio is two. The average collection period is the approximate amount of time that it takes for a business to receive payments owed in terms of accounts receivable. Net Interest Investment Returns Interest Expe...