None Closets, Closets, Closets Corp. has $1,200,000of interest-bearing debt outstanding, and itpays an annual interest rate of 9%. In addition,it has $700,000 of common stock on its balancesheet. It finances with only debt and commonequity, so it has no preferred stock. Its annualsales are $6.45 million, its average tax rate is25%, and its profit margin is 9.2%. What are itsTIE ratio and its return on invested capital(ROIC)? Round your answer to 2 decimal placesfor the final answers.

1. Times Interest Earned (TIE) Ratio:The TIE ratio measures the ability of a company to meet its…

Answered: Closets, Closets, Closets Corp. has…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The W.C. Corp. has $600,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 5%. In addition, it has $500,000 of common stock on its balance sheet. It finances with only debt and common equity, so it has no preferred stock. Its net income after taxes (NIAT) is $135,000, its average tax rate is 40%. What is its time interest earned (TIE) ratio?
The W.C. Pruett Corp. has $500,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 11%. In addition, it has $800,000 of common equity on its balance sheet. It finances with only debt and common equity, so it has no preferred stock. Its annual sales are $1.95 million, its average tax rate is 25%, and its profit margin is 2%. What are its TIE ratio and its return on invested capital (ROIC)? Round your answers to two decimal places.
The W.C. Pruett Corp. has $600,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 7%. In addition, it has $600,000 of common equity on its balance sheet. It finances with only debt and common equity, so it has no preferred stock. Its annual sales are $2.7 million, its average tax rate is 25%, and its profit margin is 7%. What are its TIE ratio and its return on invested capital (ROIC)?
The W.C. Pruett Corp. has $600,000 of interest-bearing debt outstanding,and it pays an annual interest rate of 7%. In addition, it has $600,000 of commonstock on its balance sheet. It finances with only debt and common equity, so it has no preferred stock. Its annual sales are $2.7 million, its average tax rate is 35%, and its profitmargin is 7%. What are its TIE ratio and its return on invested capital (ROIC)?
Lilly Inc has a DSO of 20 days, and its annual sales are $3,550,000. What is its accounts receivable balance? Assume that it uses a 365-day year. Lilly's Tax has a market/book ratio equal to 1. its stock price is $13 per share and it has 4.6 million shares outstanding. The firm's total capital is $115 million and its finances with only debt and common equity. what is its debt-to-capital ratio? Lilly's Tax has an ROA of 11%, a 5% profit margin, and an ROE of 23%. What is its total assets turnover? What is its equity multiplier? Lilly's Tax has an EPS of $2.40, a book value per share of $22.84, and a market/book ratio of 27X. What is its P/E ratio?
Bolero Corporation has one long term loan (interest bearing debt) of $700,000 at an interest rate of 8%. The company has accounts payable of $300,000 (non-interest bearing) and equity of $1,000,000. It estimates that its cost of equity is 16%. Its tax rate is 35%. A. What is the company’s weighted average cost of capital on interest bearing debt and equity? B. What is Bolero Corporation’s weighted average cost of capital on all liabilities and equity (or total invested capital)?
PLEASE HELP ME FINISH ASAP!
Broward Manufacturing recently reported the following information: Net income ROA BEP: Interest expense $184,800 Accounts payable and accruals $1,000,000 Broward's tax rate is 25%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, and 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Do not round intermediate calculations. Round your answers to two decimal places. ROE: ROIC: *% % $528,000 % 8%
Cha Cha Corporation has three long term loans (interest bearing debt): a loan of $100,000 at 6% interest, a loan of $100,000 at 8% interest, and a loan of $100,000 at 14% interest. The company has accounts payable of $50,000 (non-interest bearing) and equity of $200,000. It estimates that its cost of equity is 12%. Its tax rate is 35%. A. What is Cha Cha Corporation’s weighted average after tax cost of interest-bearing debt? B. What is Cha Cha Corporation’s weighted average cost of capital on interest bearing debt and equity?
The H.R. Pickett Corp. has $500,000 of debt outstanding, and it pays an annual interest rate of 10%. Its annual sales are $2 million, its average tax rate is 30%, and its net profit margin is 5%. What is its TIE ratio?
Skolits Corp. has a cost of equity of 11.8 percent and an aftertax cost of debt of 4.44 percent. The company's balance sheet lists long-term debt of $340,000 and equity of $600,000. The company's bonds sell for 104.1 percent of par and market-to-book ratio is 2.80 times. If the company's tax rate is 39 percent, what is the WACC?
Buggins Inc. is financed by $1 million in debt and $1 million in equity. The cost of debt is 5%, and the cost of equity is 10%. The company now makes a further $250,000 issue of debt and uses the proceeds to repurchase equity. This causes the cost of debt to rise to 5.5%. Assume Buggins Inc. pays no taxes. How much debt does the company now have, to the nearest thousand dollars? How much equity? What is the WACC (%)? What is the new cost of equity based off the WACC?

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