Times-Interest-Earned Ratio The Morrit Corporation has $1,200,000 of debt outstanding, and it pays an interest rate of 9
Posted: Tue Jan 18, 2022 1:00 pm
Times-Interest-Earned Ratio
The Morrit Corporation has $1,200,000 of debt outstanding, and
it pays an interest rate of 9% annually. Morrit's annual sales are
$6 million, its average tax rate is 25%, and its net profit margin
on sales is 3%. If the company does not maintain a TIE ratio of at
least 4 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.
The Morrit Corporation has $1,200,000 of debt outstanding, and
it pays an interest rate of 9% annually. Morrit's annual sales are
$6 million, its average tax rate is 25%, and its net profit margin
on sales is 3%. If the company does not maintain a TIE ratio of at
least 4 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.