What Is the Formula for Calculating the Times-Interest Earned (TIE)

question 26

Multiple Choice

What is the formula for calculating the times-interest earned (TIE) ratio?

• A)TIE ratio = Interest charges ÷ Total liabilities
• B)TIE ratio = Earnings per share ÷ Interest charges
• C)TIE ratio = Sales ÷ Interest charges
• D)TIE ratio = Earnings before interest and taxes ÷ Interest charges
• E)TIE ratio = Interest charges ÷ Net income

---

Definitions:

Schedule of Cost

A detailed report that outlines the various costs involved in producing a product, including direct materials, direct labor, and manufacturing overhead.

Goods Manufactured

The total volume of products that a company has produced within a specific period.

Managerial Accounting

It encompasses the activities of detecting, evaluating, investigating, clarifying, and distributing economic information to the leadership team for the purpose of realizing the goals of the entity.

Financial Accounting

The field of accounting that focuses on providing information to external users through financial statements.