A company has sales of $1 million, tax rate of 40%, net profit margin of 6% and total interest charges of $10,000 per year. What is the TIE ratio?
I am unable to figure this out using the formula.© BrainMass Inc. brainmass.com June 22, 2018, 9:00 pm ad1c9bdddf
The TIE formula is EBIT/Interest ( EBIT - Earnings before Interest and Taxes)
Net profit margin = 6% = ...
The solution explains the calculation of times interest earned ratio