Times Interest Earned Ratio
The higher the ICR the lower the risk. Also referred to as the times interest earned ratio it helps people to figure out the risk associated with the lent amount. The Times Interest Earned Ratio Reflects In 2022 Reflection Earnings Ratio Times Interest Earned Definition. . -The times interest earned ratio sometimes called the interest coverage ratio is a cov-erage ratio that measures the proportion-ate amount of income that can be used to cover interest expenses in the future. Hence the times interest earned ratio is five times for XYZ. Compare for example a bond paying 6 percent semiannually that is coupons of 3 percent twice a year with a certificate of deposit that pays 6 percent interest once a yearThe total interest payment is 6 per 100 par value in both cases but the holder of the semiannual bond receives. As long as enough profits are being generated to do so then a borrower is judged to be a reasonable credit risk....