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Yes, a high times interest earned ratio is considered good because it indicates that a company is generating enough earnings to cover its interest expenses.

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5mo ago

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What is the formula for times interest earned ratio?

Times Interest Earned = Operating Income/ Interest Expense.


Is a high times interest earned ratio good for a company's financial health?

Yes, a high times interest earned ratio is generally considered good for a company's financial health. It indicates that the company is generating enough operating income to cover its interest expenses, which reduces the risk of defaulting on debt payments.


Is a higher or lower times interest earned ratio better for a company's financial health?

A higher times interest earned ratio is better for a company's financial health. It indicates that the company is more capable of meeting its interest obligations with its earnings.


What does a high times interest earned ratio indicate?

A high times interest earned ratio indicates that a company is able to easily cover its interest expenses with its operating income. This suggests that the company is financially stable and less risky for investors.


A company's fixed interest expense is 8000 its income before interest expense and income taxes is 32000 Its net income is 9600 The company's times interest earned ratio is?

Formula for times interest earned = earning before interest and tax / interest expense Times interest earned = 32000 / 8000 = 4 times


What does a times interest earned ratio indicate?

the margin of safety provided to creditors


What is times burden covered ratio?

The times interest earned ratio is a financial metric that indicates a company's ability to meet its interest obligations with its operating income. It is calculated by dividing earnings before interest and taxes (EBIT) by interest expense. A higher ratio indicates a company is better able to cover its interest payments.


A firm has a times interest earned ratio of 2 .what does this mean?

A times interest earned (TIE) ratio of 2 means that the firm generates enough earnings to cover its interest expenses twice over. This indicates a reasonable level of financial stability, suggesting the company is in a position to meet its debt obligations comfortably. However, while a TIE of 2 is generally considered acceptable, it may also suggest that the firm should aim for a higher ratio to enhance its financial resilience against potential downturns.


How do you calculate simple interest earned?

simple interest = principle (money) times the rate times the time


If a firm has both interest expense and lease payments would times interest earned be smaller than fixed charge coverage?

times interest earned be smaller than fixed charge coverage


How do you calculate times interest earned if there was no interest expense?

Well that is easy there is none and there is no way you can do that


How does one calculate times interest earned?

A times interest earned is calculated to determine how well a business could pay off its debts. It is calculated by taking the company's earnings before taxes and interest and dividing it by the interest on bonds payable and other debt.