Times-interest-earned ratio

Assignment Help Financial Management
Reference no: EM13870630

Times-Interest-Earned Ratio

The Morris Corporation has $950,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris's annual sales are $3.8 million, its average tax rate is 35%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 5 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.

Reference no: EM13870630

Questions Cloud

Fixed overhead for administrative expenses-rent and salaries : A company has a cost of goods of 60% of the selling price of its products. It has $250,000 in fixed overhead for administrative expenses, rent and salaries. In addition, it spends 18% of every sales dollar on marketing. How long will it take to pay b..
Customers of a fast food chain order a hamburger : A total of 60% of the customers of a fast food chain order a hamburger, French fries, and a drink. If a random sample of 15 cash register receipts is selected, what is the probability that 10 or more will show that the above three food items were ord..
The number of electric stapler sales budgeted : Melbourne Company manufactures and sells electronic staplers for $16 each. If 10,000 units were sold in December and management forecasts 4% growth in sales each month, the number of electric stapler sales budgeted for March should be:
Debt features-loan agreement and restrictive covenant : Briefly explain the following debt features:  Loan Agreement. Restrictive Covenant.
Times-interest-earned ratio : The Morris Corporation has $950,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris's annual sales are $3.8 million, its average tax rate is 35%, and its net profit margin on sales is 3%. If the company does not maintain a TI..
About the current and quick ratios : The Nelson Company has $977,500 in current assets and $425,000 in current liabilities. Its initial inventory level is $340,000, and it will raise funds as additional notes payable and use them to increase inventory. How much can Nelson's short-term d..
Transfer of value from old shareholders to new shareholders : Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 2.2 million shares that are outstanding. Shareholders require a 8% rate of return from Consolidated stock. What will be the total present value of di..
Firm can overcome the resistance of noncustomers : Identify and discuss at least five reasons why potential customers do not purchase a firm’s goods or services. For each reason, discuss ways that the firm can overcome the resistance of noncustomers.
An all-equity-financed firm plans to grow at annual rate : An all-equity-financed firm plans to grow at an annual rate of at least 29%. Its return on equity is 45%. What is the maximum possible dividend payout rate the firm can maintain without resorting to additional equity issues?

Reviews

Write a Review

Financial Management Questions & Answers

  Compute touring enterprises'' weighted average cost

Calculate Touring Enterprises' weighted average cost of capital (WACC). Work as follows: first, compute the after-tax cost of debt, then compute the cost of equity. Cite both formulas, and show all your work.

  Question 1 capital expenditure decisions and investment

question 1 capital expenditure decisions and investment criteriabodmin plcbodmin plc is a highly profitable electronics

  Firms expected rate of return

Preston Inc.'s stock has a 25% chance of producing a 30% return, a 50% chance of producing a 12% return, and a 25% chance of producing a -18% return. What is the firm's expected rate of return?

  Fluidized-bed combustion vessel has an investment cost

A certain fluidized-bed combustion vessel has an investment cost of $110,000, a life for 10 years, and negligible market (resale) value. Annual costs of materials, maintenance, and electric power for the vessel are expected to total $11,000.

  Analyzing a special investment project

Maersk Metal Stamping is analyzing a special investment project. The project will require the purchase of two machines for $30,000 and $8,000 (both machines are required). The total residual value at the end of the project is $1,500. The project will..

  What is the present value of the bond show your work

You buy a government bond that pays interset twice a year. The interset payment is $300 each six months. The bond matures in six years. The face value of the bond is $10,000. The annual market interset rate is 6 percent.

  Large american airlines passenger jet crashes

A large American Airlines passenger jet crashes and news reaches the stock market during trading hours. Information is limited at first and then becomes more detailed. How would expect the price of American Airlines to move during this period?

  Present worth method and annual worth method

Present Worth Method and annual Worth Method - Suppose that a manufacturer is going to produce a part which is a component of a number of his assembled products.

  A regional bank has decided to open an office overseas for

a regional bank has decided to open an office overseas for serving those businesses that are expanding internationally.

  Downsizing and the expansion the firm oversees

The focus on core competencies seems to mandate both a downsizing and the expansion the firm oversees. Is this a contradiction? (Hint: Discuss the concept of core competencies and then show how spreading a business across boarders expands the gains f..

  Homework help nguyen inc is considering the purchase of a

nguyen inc. is considering the purchase of a new computer system icx for 130000. the system will require an additional

  The firms cost of preferred stock financing

The preferred stock of gator industries sells for $35.86 and pays $2.72 per year in dividends. what is the cost of preferred stock financing? if gator were to issue 483,000 more preferred shares just like the ones it currently has outstanding.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd