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scoundrel [369]
3 years ago
5

The Morris Corporation has $300,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris's annual sales are

$1.5 million, its average tax rate is 40%, and its net profit margin on sales is 4%. If the company does not maintain a TIE ratio of at least 4 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morris's TIE ratio? Do not round intermediate calculations. Round your answer to two decimal places.
Business
1 answer:
Ad libitum [116K]3 years ago
8 0

Answer: 1.41

Explanation:

Given that,

Debt outstanding = $300,000

interest rate = 8% annually

annual sales = $1.5 million

average tax rate = 40%

net profit margin on sales = 4%

interest amount = 300,000 × 0.08

                          = $24,000

net profit = 4% of 1.5 million

                = $6,000

Profit before tax = \frac{6,000}{0.60}

                           = $10,000

earning before interest and tax = profit before tax + interest

                                                    = $10,000 + $24,000

                                                    = $34,000

TIE ratio = \frac{EBIT}{Interest}

              = \frac{34,000}{24,000}

              = 1.41

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Street Company's fixed expenses total $150,000, its contribution margin ratio is 40% and its selling price per unit is $11.25. B
pickupchik [31]

Answer:

Break-even point in units= 33,333.33 units

Explanation:

<em>The break-even point (BEP) is the quantity of each product to be sold such that the business makes no profit or loss. </em>

The beak-even point can be determined as follows:  

The Break-even point in sales = Total general fixed cost / Contribution per unit margin

Contribution per unit = Contribution margin ration ×  selling price

                                   = 40%×11.25 =4.5

The break-even point (in unit) =  150,000/ 4.5 =33,333.33

break-even point in units= 33,333.33 units

3 0
3 years ago
The cash operating cycle for a merchandiser begins with cash purchases of merchandise and ends with _____.
netineya [11]

The cash operating cycle for a merchandiser begins with cash purchases of merchandise and ends with receipt of cash.

<h3><u>What is a merchandise?</u></h3>
  • Any form of items, including those used for personal or professional purposes, as well as goods sold to the general public (retail) or other enterprises, are referred to as merchandise (wholesale).
  • 'Freebies', or promotional things like the bespoke drink bottles in this example that are given away or not charged for, can also be referred to as merchandise.
  • Calendars, magnets, wall art, stationery, greeting cards, textiles, badges, and a wide variety of other goods may be included in this category.
  • A T-shirt with a slogan or logo that a political party distributes to voters during an election campaign or a calendar with a logo that a supplier offers its clients at the end of each year are two examples of freebie products.

Buying merchandise can be done with cash or on credit. The accounts involved in the transaction are the purchases account and the cash account if goods are paid for in cash. It debits the purchases account and credits the cash account.

Know more about Merchandise with the help of the given link:

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8 0
1 year ago
Leigh has three children but has not written her will which danger will she more than likely face if she dies without a will?
labwork [276]
Her children will not inherit any of her assets
4 0
3 years ago
The most important factor in determining whether a research collaboration will be successful is:
Alex

<u>Answer</u>:

The most important factor in determining whether a research collaboration will be successful is: B) Whether there is ongoing communication among the team members about their goals and responsibilities.

<u>Explanation</u>:

The research that involves participants from multiple organizations working together to achieve common goals is known as Collaborative Research. This type of research technique is an efficient and more effective way to achieve better results in a short time.

Various factors determine the success of collaborative research, such as the availability of resources, technology, relevant knowledge of the team members, but, the most important factor which determines success is an effective communication between the multiple research teams. If there is no proper communication between the teams, then there will be a lack of coordination, which is harmful for any collaboration.

Therefore, statement B is most suitable.

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