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31 December, 22:22

Orono Corp.'s sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned (TIE) ratio

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  1. 31 December, 22:37
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    Time Interest Earned Ratio (TIE Ratio) = 5.8 times

    Explanation:

    Time Interest Earned Ratio (TIE Ratio) = Income Before Interest and Tax / Interest Expense

    Details Amount ($)

    Sales 435,000

    Less: Operating Cost 362,500

    Income Before Interest and Tax (x) 72,500

    Interest (y) 12,500

    TIE Ratio (x/y) 5.8 times
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