Final answer:
The statement is false; a higher debt to capital ratio typically means a company has to make larger interest payments, thereby reducing its TIE ratio, which measures the firm's ability to cover its interest expenses with operating income.
Step-by-step explanation:
The statement that 'the higher a firm's total debt to total capital ratio, the higher its TIE ratio will be' is false. The Times Interest Earned (TIE) ratio is a financial metric used to measure a company's ability to meet its debt obligations with its operating income. As a firm's total debt to total capital ratio increases, the firm takes on more debt relative to its equity, which implies that it has to make higher interest payments on its increased debt load.
Consequently, assuming other factors remain constant, an increased debt load will reduce the firm's TIE ratio because it would have to use more of its operating income to cover interest expenses, leaving less income available for other purposes. Therefore, higher debt levels would likely lead to a lower, not higher, TIE ratio contrary to the claim in the question.