Question
The M Corporation has $600,000 of debt outstanding, and it pays an interest rate of 8% annually. M's annual sales are $3 million, its average
The M Corporation has $600,000 of debt outstanding, and it pays an interest rate of 8% annually. M's annual sales are $3 million, its average tax rate is 25%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 5 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is M's TIE ratio?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
