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##### Asked by: Tyisha Rasero

business and finance interest rates# Can Times Interest Earned be negative?

**Times Interest Earned**, this is the ratio of Operating Income for the most recent year divided by the Total Non-Operating

**Interest**Expense, Net for the same period. If a company is loss-making, we still calculate this ratio - the figure

**will**therefore be

**negative**.

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**.

**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.

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.