Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
Times Interest Earned
A measure of a company's ability to service its debts. It is calculated by dividing the company's earnings before interest and taxes by the total interest payable on its debts, expressed as a ratio. Investors prefer publicly-traded companies to have a middling times-interest-earned ratio. A low ratio indicates an inability to service debts, while too high a ratio indicates a lack of debt that investors may find undesirable.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved