Explore BrainMass

Explore BrainMass

    Times Interest Earned (TIE) Ratio

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The Hr Picket Corporation has a $500,000 of debt out standing and it pays an interest rate of 10% annually. Pickets annual sales are 2 Million dollars and 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 times its bank will refuse to renew the loan and bankrupts will result. What is Pickets TIE?

    © BrainMass Inc. brainmass.com March 4, 2021, 6:01 pm ad1c9bdddf
    https://brainmass.com/business/financial-ratios/times-interest-earned-tie-ratio-24474

    Solution Preview

    The Times Interest Earned (TIE) Ratio= Profit before Interest and Taxes/Total Interest ...

    Solution Summary

    The solution calculates Times Interest Earned (TIE) Ratio.

    $2.49

    ADVERTISEMENT