Alumbat Corporation has $1,000,000 of total assets. Its debt ratio is 70% and it pays...
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Alumbat Corporation has $1,000,000 of total assets. Its debt ratio is 70% and it pays an average interest rate of 10 percent annually on its debt. Alumbat's annual sales are $3,200,000; its average tax rate is 40 percent; and its net profit margin on sales is 6 percent. If the company does not maintain a TIE ratio of at least 4 times, its bank will refuse to renew its loan, and bankruptcy will result. What is Alumbat's current TIE ratio?
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