Interest Coverage Ratio Calculator

Corporate Solvency & Times Interest Earned (TIE) Standards

The Interest Coverage Ratio (TIE) evaluates whether a company generates sufficient operating income (EBIT) to pay the interest on its outstanding debt:

• Fundamental TIE Formula: TIE = EBIT (Operating Income)Total Interest Expense

• EBITDA Coverage: EBIT + Depreciation \& AmortizationTotal Interest Expense (measures non-cash adjusted cash coverage).

• Operating Buffer: EBIT - Interest Expense

Credit Rating & Banking Benchmark Tiers

• 8.0×: Immense safety buffer; negligible default risk.

• 3.0×--7.9×: Healthy corporate standard; comfortably meets all commercial bank covenants.

• 2.0×--2.9× (Bank Covenant Threshold): Minimum acceptable floor for most senior bank credit facilities.

• 1.0×--1.9×: Thin margin of safety; highly vulnerable to any operational downturn.

• < 1.0×: Operating profit is insufficient to service current interest debt without asset sales or external refinancing.

How to Use This Calculator

Enter your Annual EBIT / Operating Profit () (e.g. 200000), Annual Total Interest Expense () (e.g. 50000), Depreciation & Amortization ( / Optional for EBITDA) (e.g. 40000), and Credit Rating Solvency Benchmark — choose from Custom EBIT & Interest, Prime Investment Grade (EBIT 500k / Int 50k / 10.0x), Healthy Corporate BBB (EBIT 200k / Int 50k / 4.0x). Results update instantly as you type — adjust any value to compare scenarios.

The Formula

Conversion factors (to SI base unit or reference unit):

ebit: 500000.0

intExp: 50000.0

da: 50000.0

minimumFractionDigits: 2

maximumFractionDigits: 2

Worked Example

A corporation generating 500,000 EBIT with 50,000 interest expense has a 10.0x interest coverage ratio (AAA prime rating), indicating it generates 10 times more operating profit than needed to service interest.

Understanding Your Result

Age calculations depend on the calendar system and jurisdiction. Legal age of majority varies: 18 in most US states, 19 in Alabama and Nebraska, 21 historically for alcohol purchase. Many insurance products, loan terms, and benefit programs use age as of the last birthday (age nearest birthday in some actuarial contexts). Retirement age calculations: full Social Security benefit at age 67 (born 1960+); early benefit at 62 with 25–30% permanent reduction; delayed credits add 8% per year up to age 70.