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UESTION 3 The Morris Corporation has $800,000 of debt outstanding, and it pays an interest rate of 5% annually. Morris's annual sales are $4 million,
UESTION 3
- The Morris Corporation has $800,000 of debt outstanding, and it pays an interest rate of 5% annually. Morris's annual sales are $4 million, its average tax rate is 40%, 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 Morris's TIE ratio?
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Principles of Managerial Finance
Authors: Chad J. Zutter, Scott B. Smart
15th edition
013447631X, 134476315, 9780134478197 , 978-0134476315
