6. Times-interest-earned (TIE) ratio The times-interest-earned (TIE) ratio shows how well a firm can cover its interest payments with operating income. Compare the income statements of Sleepy Futon Incorporated and Purple Panda Importers and calculate the TIE ratio for each firm. Complete the following statement, based on the calculations you have already made. Describe the relationship between the TIE ratios of the two companies. Purple Panda Importers has a greater TIE ratio than Sleepy Futon Incorporated. The companies have equal TIE ratios. Sleepy Futon Incorporated has a greater TIE ratio than Purple Panda Importers. Which company is in better position to cover its interest payments, and therefore exhibits lower risk, than the other? Complete the following statement, based on the calculations you have already made. Describe the relationship between the TIE ratios of the two companies. Purple Panda Importers has a greater TIE ratio than Sleepy Futon Incorporated. The companies have equal TIE ratios. Sleepy Futon Incorporated has a greater TIE ratio than Purple Panda Importers. Which company is in better position to cover its interest payments, and therefore exhibits lower risk, than the other? Sleepy Futon Incorporated is in a better position to cover its interest payment. Purple Panda Importers is in a better position to cover its interest payment. Both companies are equally positioned to cover their interest payments