Calculations for Times Interest Earned
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What is Company A' times interest earned given the following?
sales = 220,000
total interest charges = $20,000
net profit margin = 6%
tax rate = 40%
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I know that TIE = EBIT/Interest
But to get the answer I believe I have to manipulate other formulas, but am not sure which ones. Any assistance will be helpful. Thank you.
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This solution provides step by step calculations for times interest earned.
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Net Profit= 6% of 22000
13200
Profit before tax= Net Profit/(1-tax rate)
=13200/(1-.4)
=$22000
EBIT=Profit before ...
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