Home   Restaurant   Free Restaurant Business Plan   8.14 Times Interest Earned Analysis

8.14 Times Interest Earned Analysis

The Times Interest Earned Ratio is an excellent profitability ratio and also one of the most common ratio that is used by lenders when making business loans. The Times Interest Earned Ratio is arrived at by dividing the Operating Income by the Interest expenses faced the small business on all its debt obligations. Thus the Times Interest Earned Ratio measures the ability of the small business to cover its interest cost from its operations.

In this analysis we can see that the times interest earned ratio is projected to be 7.7, 10.8 and 15.4 times in the years 2009, 2010 and 2011 respectively.The operating income is projected to be $108k, $134k and $162k respectively in the years ahead while the interest payments on the debt that isoutstanding on the balance sheet of A Taste of Tuscany is projected to be $14k, $12k and $10k respectively.

Clearly if, the business was to take on more debt resulting in higher interest payments, the times interest earned ratio would be impacted negatively. Alsoif the operating income were to be reduced due to slower sales and / or higher operating expenses, this ratio would again get worse.

Quick Links:

  1. Go to the Corresponding Template section for this industry.
  2. Go to the Corresponding Questionnaire section for this industry.

Small Business Owner Resource Center

Articles

Articles on the Small Business Financing Sources, the Small Business Loan Basics, small business loans Checklist and SBA Loans are incredible sources of knowledge for the small business owner.

 

Articles

Credit Report and Credit Score Analysis, how to Read a Personal Credit Report and all about Business Credit cover the intricacies of credit and are required reading for everybody.

 

Articles

The Foundation Grant Directory is a free listing of sources for grants by state. Why not look if there is some free money out there for your business. Hey - you never know!

 

Articles

The Business Loan Application covers every item you will need in your loan package and tells you how to get approved for business loans.

 

Articles

Fire your loan broker and use our Free Business Loans Bank / Lender Directory to find every bank in the country lending to small businesses.

 

Articles

If you are looking to start a business - look no further.  Check out the Free Incorporation Guide discussion and the State Incorporation Resource Directory.

Rate this page
Your feedback is important to us | Please rate this page
1 2 3 4 5
HELP US SPREAD THE WORD | LINK TO THIS PAGE