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Homework answers / question archive / Times-Interest-Earned Ratio The Morris Corporation has $600,000 of debt outstanding, and it pays an interest rate of 10% annually
Times-Interest-Earned Ratio
The Morris Corporation has $600,000 of debt outstanding, and it pays an interest rate of 10% annually. Morris's annual sales are $3 million, its average tax rate is 35%, and its net profit margin on sales is 4%. If the company does not maintain a TIE ratio of at least 4 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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