Question
Supposing you are working with a Local Bank as Loan Manager. Your Bank's Policy is to not give any loan if the TIMES INTEREST EARNED(
Supposing you are working with a Local Bank as Loan Manager. Your Bank's Policy is to not give any loan if the TIMES INTEREST EARNED( TIE) Ratio is less than 3.00. A small Business wants to borrow $100,000. His Income Statement for the year ending is given below:
1. Net Sales = $ 2.75 m: 2. COGS = $ 1.50 m : 3. Operating Expenses = $ 0.75 m:
4. Interest Payments = $ 0.2 m.
According your calculation. the calculated Value of TIE RATIO is =
| a. | 3.50 > 3.00, Approve the Loan Application | |
| b. | 3.76 > 3.00, Approve the Loan Application | |
| c. | 2.50 < 3.00 Reject the Loan Application | |
| d. | Approve the Loan anyway, because as a Loan Manager you will earn 1% of Loan amount in Commission. | |
| e. | 1. 82 < 3.00 Reject the Loan Application |
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
9781266566899
