Question
Times-Interest-Earned Ratio The Morrit Corporation has $960,000 of debt outstanding, and it pays an interest rate of 10% annually. Morrit's annual sales are $6 million,
Times-Interest-Earned Ratio
The Morrit Corporation has $960,000 of debt outstanding, and it pays an interest rate of 10% annually. Morrit's annual sales are $6 million, its average tax rate is 25%, and its net profit margin on sales is 4%. 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 Morrit's TIE ratio? Do not round intermediate calculations. Round your answer to two decimal places.
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The Wall Street Journal Complete Personal Finance Guidebook
Authors: Jeff D. Opdyke
1st Edition
030733600X, 978-0274804573
