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The Yellow Corp has $800,000 of debt outstanding, and it pays an interest rate of 8% annually. Its annual sales are $3 million, its average
The Yellow Corp has $800,000 of debt outstanding, and it pays an interest rate of 8% annually. Its annual sales are $3 million, its average tax rate is 25%, and its net profit margin on sales is 14%. If the company does not maintain a times interest earned (TIE) ratio of at least 5 to 1, then its bank will refuse to renew the loan and bankruptcy will result. What is its TIE ratio? Show your answer in this format: 12.34 (meaning 12.34 times covered)
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