Alumbat corporation has 800000 of debt outstanding and it, Ask an Expert

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Alumbat Corporation has $800,000 of debt outstanding, and it pays an interest rate of 10 percent annually on its bank loan. Alumbat's annual sales are $3,200,000; its average tax rate is 40 percent; and its net profit margin on sales is 6 percent. If the company does not maintain a TIE ratio of at least 4 times, its bank will refuse to renew its loan, and bankruptcy will result. What is Alumbat's current TIE ratio?

a. 2.4
b. 3.4
c. 3.6
d. 4.0
e. 5.0

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Basic Finance, Finance

Category:- Basic Finance
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