Question
Times-Interest-Earned Ratio The Morris Corporation has $500,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris's annual sales are $2.5 million,
Times-Interest-Earned Ratio
The Morris Corporation has $500,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris's annual sales are $2.5 million, its average tax rate is 35%, and its net profit margin on sales is 6%. If the company does not maintain a TIE ratio of at least 5 to 1, its bank will refuse to renew the loan and bankruptcy will result. What is Morris's TIE ratio? Do not round intermediate calculations. Round your answer to two decimal places.
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Modern Portfolio Theory and Investment Analysis
Authors: Edwin Elton, Martin Gruber, Stephen Brown, William Goetzmann
9th edition
9781118805800, 1118469941, 1118805801, 978-1118469941
