10. 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 hungry whale electronics company and calculate the tie ratio for each firm. sleepy futon incorporated income statement for the year ended on december 31 (millions of dollars) net sales $700 variable costs 280 fixed costs 245 total operating costs 525 operating income (or ebit) $175 less interest 80 earnings before taxes (ebt) $95 less taxes (40%) 38 net income $57 times-interest-earned (tie) hungry whale electronics company income statement for the year ended on december 31 (millions of dollars) net sales $1,000 variable costs 250 fixed costs 450 total operating costs 700 operating income (or ebit) $300 less interest 80 earnings before taxes (ebt) $220 less taxes (40%) 88 net income $132 times-interest-earned (tie) complete the following statement, based on the calculations you have already made. describe the relationship between the tie ratios of the two companies. sleepy futon incorporated has a greater tie ratio than hungry whale electronics company. the companies have equal tie ratios. hungry whale electronics company has a greater tie ratio than sleepy futon incorporated. 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. both companies are equally positioned to cover their interest payments. hungry whale electronics company is in a better position to cover its interest payment.