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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 6 million, its average tax rate is 25%, and its net profit margin on sales is 6%. If the company does not maintain a TIE ratio of east 5 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit' s TIE ratio? Do not round termediate calculations. Round your answer to two decimal places.

The Morrit Corporation has $1,020,000 of debt outstanding, and it pays an interest rate of 8% annually. Morrit' s annual sales 6 million, its average tax rate is 25%, and its net profit margin on sales is 6%. If the company does not maintain a TIE ratio of east 5 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit' s TIE ratio? Do not round termediate calculations. Round your answer to two decimal places.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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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 6%. If the company does not maintain a TIE ratio of at least 5 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.
Transcribed Image Text: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 6%. If the company does not maintain a TIE ratio of at least 5 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.
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