Anderson Technologies has $600,000 of debt outstanding, and it pays an interest rate of 7% annually. Anderson's annual sales are $3.5 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 4 to 1, its bank will refuse to renew the loan and bankruptcy will result. What is Anderson Technologies' TIE ratio?

Anderson Technologies has $600,000 of debt outstanding, and it pays an interest rate of 7% annually. Anderson's annual sales are $3.5 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 4 to 1, its bank will refuse to renew the loan and bankruptcy will result. What is Anderson Technologies' TIE ratio?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter7: Analysis Of Financial Statements

Section: Chapter Questions

Problem 10P: The Morrit Corporation has $600,000 of debt outstanding, and it pays an interest rate of 8%...

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The Morrit Corporation has $1,020,000 of debt outstanding, and it pays an interest rate of 8% annually. Morrit's annual sales are $6 million, its average tax rate is 25%, and its net profit margin on sales is 5%. 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 Tarpon Corp has $325,000 of debt outstanding, and it pays an interest rate of 7% annually. Its annual sales are $900,000, its average tax rate is 25%, and its net profit margin on sales is 10 %. If the company does not maintain a times interest earned (TIE) ratio of greater than 5 to 1, then its bank will refuse to renew the loan and bankruptcy will result. Holding sales constant, at what operating (EBIT) margin would the bank refuse to renew the loan? O 14.06% O 16.25% O 15.17% O 17.50%
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