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The times-interest-earned (TIE) ratio shows how well a firm can cover its interest payments with operating income. Compare the income statements of Blue Moose Producers
The times-interest-earned (TIE) ratio shows how well a firm can cover its interest payments with operating income. Compare the income statements of Blue Moose Producers and Sweet Dog Manufacturing and calculate the TIE ratio for each firm. Complete the following statement, based on the calculations you have already made. Describe the relationship between the TIE ratios of the two companies. The companies have equal TIE ratios. Sweet Dog Manufacturing has a greater TIE ratio than Blue Moose Producers. Blue Moose Producers has a greater TIE ratio than Sweet Dog Manufacturing. Which company is in better position to cover its interest payments, and therefore exhibits lower risk, than the other? Blue Moose Producers is in a better position to cover its interest payment. Both companies are equally positioned to cover their interest payments. Sweet Dog Manufacturing is in a better position to cover its interest payment
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