Debt Ratio:

This ratio finds out that how much of the total asset is funded through debt. So, it
actually shows the dependency on debt in order to manage assets. If the ratio is
higher than it means that the firm has higher debt and it is more dependent to its
creditors for necessary financing. If the ratio is higher than 1, it indicates excess
debt over total assets and the vice versa. Although higher debt is not a problem if
interest payments are made on time, then definitely a great risk for the firm.
Sometimes, higher debt can also give the firm the benefit of financial leverage.
Debt Ratio = Total Liabilities/Total Assets

Year

2011

2012

2013

2014

Total
Liabiliti
es /
Total
Assets

8,77,55,76,000/
20,82,45,67,00
0

11,05,23,000/
25,54,49,000

2,14,65,13,000/3
,99,76,25,000

2,71,18,25,000/5,
02,83,22,000

42%

43%

53%

54%

Result
(%)

Debt Ratio
60%
50%
40%

Debt Ratio

30%
20%
10%
0%
2011

2012

2013

2014

Times-Interest-Earned Ratio:
The times interest earned ratio is an indicator of a company's ability to meet the
interest payments on its debt. The times interest earned calculation is a
corporation's income before interest and income tax expense, divided by interest
expense.
Times interest earned (TIE) ratio = Earnings before interest & taxes/Interest Charges

Year

2011

2012

2013

2014

Earnin
gs
before
interes
t&
taxes/I
nterest
Charge
s

No of
times

Times-Interest-Earned Ratio
60%
50%
Times-Interest-Earned
Ratio

40%
30%
20%
10%
0%
2011

2012

Fixed Charge Coverage Ratio:

2013

2014

The fixed charge coverage ratio is a financial ratio that measures a firm's ability to
pay all of its fixed charges or expenses with its income before interest and income
taxes. The fixed charge coverage ratio is basically an expanded version of the times
interest earned ratio or the times interest coverage ratio.
The fixed charge coverage ratio is very adaptable for use with almost any fixed cost
since fixed costs like lease payments, insurance payments, and preferred dividend
payments can be built into the calculation.

Year
EBIT +
fixed
charges
before
taxes /
fixed
charges
before
taxes +
interest

No of
times

2011

2012

2013

2014

Times-Interest-Earned Ratio
60%
50%
Times-Interest-Earned
Ratio

40%
30%
20%
10%
0%
2011

2012

2013

2014