Question
Please help explain the following: Times-Interest-Earned Ratio The Morris Corporation has $960,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris
Please help explain the following:
Times-Interest-Earned Ratio
The Morris Corporation has $960,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris annual sales are $6 million, its average tax rate is 25%, and its net profit margin on sales is 7%. If the company does not maintain a TIE ratio of at least 3 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morris TIE ratio? Do not round intermediate calculations. Round your answer to two decimal places.
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Principles of Managerial Finance
Authors: Chad J. Zutter, Scott B. Smart
15th edition
013447631X, 134476315, 9780134478197 , 978-0134476315
