Explore BrainMass

Question about Times interest earned ratio

Manor Corp. has $ 500,000 of debt outstanding and it pays an interest rate of 10% annually. Manor's annual sales are $2 million, and its average tax rate is 30% and its net profit margin is 5%. If the company does not maintain a TIE ratio of at least 5 times, its bank will not renewal the loan, and bankruptcy will result. What is Manor's TIE ratio?

Solution Summary

Times interest earned ratio for Manor Corp. are examined. Manor Corp.'s outstanding debt is $500,000.