Times interest earned ratio

Times interest earned ratio - 1,500 EBIT $15,450 $ (795)...

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Times interest earned ratio.  The  times interest earned ratio  is an indicator of the company's  ability to pay interest as it comes due. It is calculated by dividing earnings before interest and taxes  (EBIT) by interest expense. 
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20X1 20X0 Income before interest expense and income taxes Income (loss) before taxes $13,550 $(2,295) Interest expense 1,900
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Unformatted text preview: 1,500 EBIT $15,450 $ (795) Interest Expense $ 1,900 $ 1,500 Times interest earned 8.1 times N/M A times interest earned ratio of 23 or more indicates that interest expense should reasonably be covered. If the times interest earned ratio is less than two it will be difficult to find a bank to loan money to the business....
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Times interest earned ratio - 1,500 EBIT $15,450 $ (795)...

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