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The Morris Corporation has $800,000 of debt outstanding, and itpays an interest rate of 5%

The Morris Corporation has $800,000 of debt outstanding, and itpays an interest rate of 5%

The Morris Corporation has $800,000 of debt outstanding, and itpays an interest rate of 5% annually. Morris’s annual sales are $4million, its average tax rate is 40%, and its net profit margin onsales is 3%. If the company does not maintain a TIE ratio of atleast 5 to 1, then its bank will refuse to renew the loan andbankruptcy will result. What is Morris’s TIE ratio?

 

 

               6.000

 

 

               3.000

 

 

               4.125

 

 

               3.750

 

 

               5.000

Abhinav 01-Dec-2019

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