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What is TIE ratio

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Question - The Manor Corporation has $500,000 of debt outstanding and it pays an interest of 10% annually. Manor's annual sales are $2 million. Its average tax rate is 30% and its net profit margin on sales is 5%. If the company does not maintain TIE ratio of at least 5 to 1, then its bank will refuse to renew the loan and bankruptcy will result. What is TIE ratio?

Reference no: EM133030470

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