Use the information below provided by Angel Baby Angel Company:Sales 8,250,000.00Operating costs 4,725,000.00Operating income 3,525,000.00Interest expense 1,750,000.00Earnings before taxes 1,775,000.00Taxes (40%) 621,250.00Net income 1,153,750.00 WACC = 8%, Total invested capital 24,875,000. Question1.) What is its TIE ratio? Use 4 decimal places in your final answer.2.) What is its Return on Invested Capital? Use 2 decimal places in your final answer. Express in percentage3.) Calculate the EVA. (2 decimal places)

Solution:- 1)Calculation of Times interest earned ratio as follows under:- Times interest earned…

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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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Use the information below provided by Angel Baby Angel Company:

Sales	8,250,000.00
Operating costs	4,725,000.00
Operating income	3,525,000.00
Interest expense	1,750,000.00
Earnings before taxes	1,775,000.00
Taxes (40%)	621,250.00
Net income	1,153,750.00

WACC = 8%, Total invested capital 24,875,000.

Question

1.) What is its TIE ratio? Use 4 decimal places in your final answer.

2.) What is its Return on Invested Capital? Use 2 decimal places in your final answer. Express in percentage

3.) Calculate the EVA. (2 decimal places)

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