Debt management ratios measure the extent to which a firm uses financial leverage and the degree of safety afforded to - They include the: (1) Debt-to-capital ratio, (2) Times interest earned ratio (TIE), and (3) EBITDA coverage ratio. The first ratio analyzes debt by looking at the firm's , while the last two ratios analyze debt by looking at the firm's . Tebt-to-capital ratio measures the percentage of funds provided by . Its equation is: TotalcapitalTotaldebt=Totaldebt+EquityTotaldebt High debt ratios that exceed the industry average may make it costly for a firm to borrow additional funds without first raising more interest earned ratio measures the extent to which income can decline before the firm is unable to meet its annual equation is: Times-interest-earned (TIE) ratio =interestchargesEBIT EBIT is used as the numerator because is paid with pretax dollars-the firm's ability to pay EBITDA coverage ratio is: EBITDA coverage ratio =Interest+Principalpayments+LeasepaymentsEBITDA+Leasepayments This ratio is more complete than the TIE ratio because it recognizes that depreciation and amortization are not expenses, so these amounts are available to service debt, and lease payments and principal repayments are fixed payments. Debt management ratios measure the extent to which a firm uses financial leverage and the degree of safety afforded to - They include the: (1) Debt-to-capital ratio, (2) Times interest earned ratio (TIE), and (3) EBITDA coverage ratio. The first ratio analyzes debt by looking at the firm's , while the last two ratios analyze debt by looking at the firm's . Tebt-to-capital ratio measures the percentage of funds provided by . Its equation is: TotalcapitalTotaldebt=Totaldebt+EquityTotaldebt High debt ratios that exceed the industry average may make it costly for a firm to borrow additional funds without first raising more interest earned ratio measures the extent to which income can decline before the firm is unable to meet its annual equation is: Times-interest-earned (TIE) ratio =interestchargesEBIT EBIT is used as the numerator because is paid with pretax dollars-the firm's ability to pay EBITDA coverage ratio is: EBITDA coverage ratio =Interest+Principalpayments+LeasepaymentsEBITDA+Leasepayments This ratio is more complete than the TIE ratio because it recognizes that depreciation and amortization are not expenses, so these amounts are available to service debt, and lease payments and principal repayments are fixed payments