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Times-Interest-Earned Ratio
The Morris Corporation has $600,000 of debt outstanding, and it pays an interest rate of 9% annually. Morris's annual sales are $3 million, its average tax rate is 40%, and its net profit margin on sales is 8%. 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 Morris's TIE ratio? Round intermediate calculations to two decimal places. Round your answer to two decimal places.
Choose a company from Fortune 500 article. Using the financial data of the selected company, provide the following ratios: Inventory Period, Accounts Receivable Period, and Average Payment Period. Discuss the meaning of these ratios and their relevan..
Southern Markets recently paid a $2.80 annual dividend on its common stock. This dividend increases at an average rate of 3.8 percent per year. The stock is currently selling for $26.91 a share. What is the market rate of return?
Tell Me Why Co. is expected to maintain a constant 4.8 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 6.6 percent, what is the required return on the company’s stock?
Stock A has an expected return of 12% and a standard deviation of 11.7%, and Stock B has an expected return of 20% and a standard deviation of 24.2%. The correlation coefficient between the two stock is -0.4. In order to produce the minimum risk port..
Which of the following set of actions are unlikely to help a company achieve a differentiation based competitive advantage over some/many of its camera rivals when it comes to assembling and marketing multi-featured camera?
Summarize the types of details would you present to the board of directors finance committee when seeking approval for a new fiscal year budget?
Quixote Industries currently has $6 million in debt and $10 million in equity. Assume the firm uses some of its cash to decrease its debt while maintaining its current equity and net income. Which one of the following will decrease as a result of thi..
Jordan and Taylor want to purchase a new 60 quart floor mixer for $12,000. This machine would have a 5 year life with a salvage value of $2,000. The new machine would decrease operating costs by $1,000 each year of its economic life. What is the payb..
A put option on a stock with a current price of $48 has an exercise price of $50. The price of the corresponding call option is $4.50. According to put-call parity, if the effective annual risk-free rate of interest is 6% and there are four months un..
A condominium is purchased for $80,000 with a down payment of $12,000 at an annual interest rate of 9% for 15 years. Calculate the unpaid balance after 10 years of making payments. What would be the market value of the condominium in Exercise 21 afte..
You are evaluating two different cookie-baking ovens. The Pillsbury 707 costs $61,000, has a 5-year life, and has an annual OCF (after tax) of –$10,800 per year. The Keebler CookieMunster costs $94,000, has a 7-year life, and has an annual OCF (after..
The exercise price on one of ORNE Corporation's call options is $25 and the price of the underlying stock is $29. The option will expire in 35 days and is currently selling at $5.50. Calculate the option's exercise value? What is the significance of ..
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