What is the Times Interest Earned Ratio Template and why is it important in a business plan for a Landscape Contractor?
The Times Interest Earned Ratio is a key ratio that denotes the ability of a small business like Green Lawn Landscaping, Inc. to cover its annual interest expenses. It is looked at very carefully by lenders when they are looking to make a decision on lending a business loan to a small business and the Times Interest Earned Ratio Template gives a small business owner like Frank Murphy the ability to present this key ratio in both numerical and graphic form to the readers of the business plan.
As a general rule the higher the Times Interest Earned Ratio the better it is for a small business like Green Lawn Landscaping, Inc. since it indicates that the business has a better cushion to pay its annual interest expenses.
What calculations go into the template for the Times Interest Earned Ratio for a small business like Green Lawn Landscaping, Inc.?
All you have to do is to input the two variables that make up the ratio in the input section of the template. The first of course is the Operating Income which is also known as the Earnings Before Income and Taxes (EBIT), the second is the Annual Interest Expenses for the small business. Once you input these two variables, the template will automatically calculate the Times Interest Earned Ratio for the 3 years being projected in the business plan and also update the chart. You can then click on the output tab from where you can copy and paste the output directly into the business plan word document.
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