Manufactuer's Inc estimates that its interest charges for this year will be $700 and that its net...
Question:
Manufactuer's Inc estimates that its interest charges for this year will be {eq}\$700 {/eq} and that its net income will be {eq}\$3000 {/eq}. Assuming its average tax rate is {eq}30\% {/eq}, what is the company's estimated times interest earned ratio?
Tie Interest Earned:
Time Interest Earned Ratio is a financial statement ratio which measures profitability. It computes for the number of times an interest could be paid based on the amount of net income generated in the operations.
Answer and Explanation: 1
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View this answerTime Interest Earned = Net Income/Interest Expense
| Net Income | 3,000 |
| Time Interest Earned | 700 |
| Time Interest Earned | 4.29 |
This means that the interest...
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Times Interest Earned Ratio | Definition, Formula & Analysis
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Chapter 8 / Lesson 3
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Discover what times interest earned ratio (TIE) is and why it is used. Learn the times interest earned ratio formula and understand how TIE ratios are analyzed.
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