TIE Ratio problem

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

    • 11 years ago
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