EBIT = earnings before interest and taxesI = dollar amount of interest payable on debt
The Times Interest Earned Ratio shows how many times earnings will cover fixed-interest payments on long-term debt.
I = interest paymentss = payment on principal figured on income after taxes (1 - h)
This ratio goes one step further than Times Interest Earned, because debt obliges the borrower to not only pay interest but make payments on the principal as well.
