MPI Incorporated has $4 billion in assets, and its tax rate is40%. Its basic earning power (BEP) ratio is 8%, and its return onassets (ROA) is 3%. What is MPI's times-interest-earned (TIE)ratio? Round your answer to two decimal places.
x
Pacific Packaging's ROE last year was only 4%; but itsmanagement has developed a new operating plan that calls for adebt-to-capital ratio of 40%, which will result in annual interestcharges of $390,000. The firm has no plans to use preferred stockand total assets equal total invested capital. Management projectsan EBIT of $1,040,000 on sales of $10,000,000, and it expects tohave a total assets turnover ratio of 2.4. Under these conditions,the tax rate will be 30%. If the changes are made, what will be thecompany's return on equity? Do not round intermediate calculations.Round your answer to two decimal places.
%
MPI Incorporated has $4 billion in assets, and its tax rate is40%. Its basic earning power (BEP) ratio is 8%, and its return onassets (ROA) is 3%. What is MPI's times-interest-earned (TIE)ratio? Round your answer to two decimal places.
x
Pacific Packaging's ROE last year was only 4%; but itsmanagement has developed a new operating plan that calls for adebt-to-capital ratio of 40%, which will result in annual interestcharges of $390,000. The firm has no plans to use preferred stockand total assets equal total invested capital. Management projectsan EBIT of $1,040,000 on sales of $10,000,000, and it expects tohave a total assets turnover ratio of 2.4. Under these conditions,the tax rate will be 30%. If the changes are made, what will be thecompany's return on equity? Do not round intermediate calculations.Round your answer to two decimal places.
%
Related questions
Problem 3-6
Du Pont Analysis
Gardial & Son has an ROA of 9%, a 3% profit margin, and a return on equity equal to 13%.
What is the company's total assets turnover? Round your answer to two decimal places.
What is the firm's equity multiplier? Round your answer to two decimal places.
Current and Quick Ratios
Ace Industries has current assets equal to $7 million. The company's current ratio is 2.5, and its quick ratio is 2.0.
What is the firm's level of current liabilities? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000
$
What is the firm's level of inventories? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000
$
Problem 3-8
Profit Margin and Debt Ratio
Assume you are given the following relationships for the Haslam Corporation:
| Sales/total assets | 1.9 |
| Return on assets (ROA) | 3% |
| Return on equity (ROE) | 9% |
Calculate Haslam's profit margin. Do not round intermediate calculations. Round your answer to two decimal places.
%
Calculate Haslam's liabilities-to-assets ratio. Do not round intermediate calculations. Round your answer to two decimal places.
%
Suppose half of Haslam's liabilities are in the form of debt. Calculate the debt-to-assets ratio. Do not round intermediate calculations. Round your answer to two decimal places.
%
Problem 3-9
Current and Quick Ratios
The Nelson Company has $1,650,000 in current assets and $550,000 in current liabilities. Its initial inventory level is $330,000, and it will raise funds as additional notes payable and use them to increase inventory.
How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 1.3? Round your answer to the nearest cent.
$
What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? Round your answer to two decimal places.
Problem 3-10
Times-Interest-Earned Ratio
The Morris Corporation has $850,000 of debt outstanding, and it pays an interest rate of 8% annually. Morris's annual sales are $3.4 million, its average tax rate is 40%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 5 to 1, its bank will refuse to renew the loan and bankruptcy will result. What is Morris's TIE ratio? Round intermediate calculations to two decimal places. Round your answer to two decimal places.
