Answer:
TVG
Times Interest Earned Ratio (TIER) = Earnings Before Interest & Taxes divided by Interest Expense
= $300,000/$$80,000 = 3.75 times
Explanation:
a) TVG Income Statement:
Revenue $3,000,000
Cost of goods sold 2,500,000
Gross profit $500,000
Depreciation 200,000
EBIT $300,000
Interest Expense 80,000
Pre-tax Income $220,000
b) TVG's TIER shows the number of times that its earnings before interest and taxes covers the interest expense. It shows the ability of the TVG to settle its maturing debt obligations from current earnings. It is an important financial performance measure which potential investors in TVG will use to gauge the ability of TVG to meet financial obligations from the earnings it generates.
Answer:
The answer is: Expected annual net cash savings are $16,750.
Explanation:
Please find the below for detailed explanations and calculations:
Payback period is defined as the time it takes an investment to recover its initial investment.
In this case, the initial investment is the cost of software package at $67,000, while the payback period is four years.
We apply the payback period formula to calculate payback period to calculate the Expected annual net cash savings:
Payback period = Initial investment / Net cash flow per period <=> Net cash flow per period = Initial investment / payback period = 67,000 / 4 = $16,750.
So, Net cash savings annually is expected at $16,750. In other words, if the firm is to save $16,750 per year from owning the software, it will take the firm 04 years to recover its initial investment.
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