Asked by: Tyisha Raserobusiness and finance interest rates
Can Times Interest Earned be negative?
Last Updated: 24th June, 2021
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Furthermore, can you have negative interest income?
A negative net interest means that you paid more interest on your loans than you received in interest on your investments. On a financial statement, you may list interest income separately from income expenses, or provide a net interest number that's either positive or negative.
Also, what does Time Interest Earned Ratio indicate? The times interest earned (TIE) ratio is a measure of a company's ability to meet its debt obligations based on its current income. The result is a number that shows how many times a company could cover its interest charges with its pretax earnings.
Secondly, why would Times Interest Earned decrease?
A lower times interest earned ratio means fewer earnings are available to meet interest payments. Failing to meet these obligations could force a company into bankruptcy. It is used by both lenders and borrowers in determining a company's debt capacity.
What does a negative interest coverage ratio mean?
A bad interest coverage ratio is any number below 1, as this translates to the company's current earnings being insufficient to service its outstanding debt.