Question

MPI Incorporated has $8 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 12%, and its return on assets (ROA) is 3%. What is MPI's times-interest-earned (TIE) ratio? Do not round intermediate calculations. Round your answer to two decimal places.

Answer #1

Times interest earned ratio = Earnings Before Interest and taxes / Interest expense

Step1: Computation of EBIT.

Basic earning power ratio = EBIT / Total Assets

EBIT = Total Assets * Basic earning power ratio

EBIT = $8,000,000,000 * 12%

EBIT = $960,000,000

Step 2: calculation of Interest expense.

ROA = Net income / Total assets

Net Income = $8,000,000,000 * 3% = $240,000,000

EBT = Net income / (1 - T) = $240,000,000 / (1 - 0.35)

EBT = $369,230,769.23

EBT = EBIT - Interest expense

Interest expense = EBIT - EBT = $960,000,000 - $369,230,769.23

Interest expense = $590,769,230.77

Step 3: Computation of Times interest earned ratio.

Times interest earned ratio = $960,000,000 / $590,769,230.77

Times interest earned ratio = 1.6249999 or 1.62 (rounded off to '2' decimals)

MPI Incorporated has $12 billion in assets, and its tax rate is
25%. Its basic earning power (BEP) ratio is 12%, and its return on
assets (ROA) is 3%. What is MPI's times-interest-earned (TIE)
ratio? Do not round intermediate calculations. Round your answer to
two decimal places.
×

MPI Incorporated has $9 billion in assets, and its tax rate is
25%. Its basic earning power (BEP) ratio is 12%, and its return on
assets (ROA) is 6%. What is MPI's times-interest-earned (TIE)
ratio? Do not round intermediate calculations. Round your answer to
two decimal places.

MPI Incorporated has $9 billion in assets, and its tax rate is
25%. Its basic earning power (BEP) ratio is 13%, and its return on
assets (ROA) is 3%. What is MPI's times-interest-earned (TIE)
ratio? Do not round intermediate calculations. Round your answer to
two decimal places.

MPI Incorporated has $3 billion in assets, and its tax rate is
25%. Its basic earning power (BEP) ratio is 10%, and its return on
assets (ROA) is 5%. What is MPI's times-interest-earned (TIE)
ratio?

TIE RATIO
MPI Incorporated has $5 billion in assets, and its tax rate is
35%. Its basic earning power (BEP) ratio is 11%, and its return on
assets (ROA) is 5%. What is MPI's times-interest-earned (TIE)
ratio? Round your answer to two decimal places.

TIE RATIO
MPI Incorporated has $9 billion in assets, and its tax rate is
35%. Its basic earning power (BEP) ratio is 13%, and its return on
assets (ROA) is 4%. What is MPI's times-interest-earned (TIE)
ratio? Round your answer to two decimal places.
x

MPI Incorporated has $4 billion in assets, and its tax rate is
35%. Its basic earning power (BEP) ratio is 9%, and its return on
assets (ROA) is 3%. The data has been collected in the Microsoft
Excel Online file below. Open the spreadsheet and perform the
required analysis to answer the question below.
What is MPI's times-interest-earned (TIE) ratio? Round your
answer to two decimal places

MPI Incorporated has $5 billion in assets, and its tax rate is
35%. Its basic earning power (BEP) ratio is 9%, and its return on
assets (ROA) is 4%. The data has been collected in the Microsoft
Excel Online file below. Open the spreadsheet and perform the
required analysis to answer the question below.
Open spreadsheet
What is MPI's times-interest-earned (TIE) ratio? Round your
answer to two decimal places.

Problem 4.18 (TIE Ratio)
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.
=

TPI 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 4%. What is TPI's times-interest-earned (TIE)
ratio? Do not round intermediate calculations. Round your answer to
two decimal places.

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