Assume the following data: EBIT = 100; Depreciation = 40; Interest = 20; Dividends = 10.Calculate the times interest earned (TIE)ratio.(Account for depreciation.)
A)7.0
B)5.0
C)4.7
D)14.0

Question

Quizplus · Accepted Answer

The Times Interest Earned (TIE) ratio is calculated as EBIT divided by Interest. Here, EBIT is 100 and Interest is 20, so TIE = 100 / 20 = 5.0. Depreciation does not affect the TIE calculation.

Assume the Following Data: EBIT = 100; Depreciation = 40;