Question

eBook Problem Walk-Through MPI Incorporated has $3 billion in assets, and its tax rate is 25%. Its basic earning power (BEP) ratio is 9%, and its return on assets (ROA) is 5%. What is MPI's times-interest-earned (TIE) ratio? Do not round intermediate calculations. Round your answer to two decimal places.

Answer 1

9 Assets . #3 billion $3,000,000,000 Tax Rate 25% Be F(basic eaming power) . 9/ ratio ROA 5.1 TIE ( Times - Interest Comed) Ratio - ? ? Sob .. BEP = EBIT Assets .. EBIT - 97 X $3,000,000,000 270,000,000 ROA (Retum on Asset) Net Income Asset Net Income 5.7. * $3,000,000,000 $150,000,000 = EBT EBIT - Interest Expense EBT (1-+) = Net Income. CS Scannind with comicanner

EBT = Net Income 1-t $150,000,000 (t = 2542 0.75 -$200,000 Interest expense EBIT - EBT $ 270,000,000 - $200,000, oyo $70,000,000 TIE = EBIT Interest Expense $ 270,000,000 = 70,000,000 3.85 Ans.