How many times can the Johnson Corporation cover their interest expens
How many times can the Johnson Corporation cover their interest expenses if the firm has sales of $3,000,000, total assets of $2,100,000, EBIT equal to $1,000,000, a tax rate of 40% and interest expense of $250,000?
A) 1.43
B) 2.10
C) 4.00
D) 12.00
ANSWER
C
Explanation: C) TIE = EBIT/I = $1,000,000/$250,000 = 4.00.
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