Home / Questions / 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?
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