eBook Problem Walk-Through Thomson Trucking has $14 billion in assets, and its tax rate is 40%. Its basic earning power (BEP) ratio is 11%, and its return on assets (ROA) is 4%. What is its times-interest-earned (TIE) ratio? Round your answer to two decimal places.

eBook Problem Walk-Through Thomson Trucking has $14 billion in assets, and its tax rate is 40%. Its basic earning power (BEP) ratio is 11%, and its return on assets (ROA) is 4%. What is its times-interest-earned (TIE) ratio? Round your answer to two decimal places.

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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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

11. Problem 4.12 (Ratio Calculations)
eBook
Problem Walk-Through
Thomson Trucking has $14 billion in assets, and its tax rate is 40%. Its basic earning power (BEP) ratio is 11%, and its return on assets (ROA) is 4%. What is its times-interest-earned (TIE) ratio?
Round your answer to two decimal places.
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