MPI Incorporated has $12 billion in assets, and its tax rate is 25%. Its basic earning...

Question

Question

MPI Incorporated has $12 billion in assets, and its tax rate is 25%. Its basic earning power (BEP) ratio is 9%, and its retur

Answer 1

Answer #1

EBIT = Total Assets * BEP = $12 billion * 0.09 = $1.08 billion

Net Income = Total Assets * ROA = $12 billion * 0.04 = $0.48 billion

EBT = Net Income / (1 - t) = $0.48 billion / (1 - 0.25) = $0.64 billion

Interest Expense = EBIT - EBT = $1.08 billion - $0.64 billion = $0.44 billion

TIE Ratio = EBIT / Interest Expense = $1.08 billion / $0.44 billion = 2.45

Answer 2

Similar Homework Help Questions

MPI Incorporated has $6 billion in assets, and its tax rate is 35%. Its basic earning...

MPI Incorporated has $6 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 9%, and its return on assets (ROA) is 4%. What is MPI's times interest earned (TIE) ratio? Round your answer to two decimal places. ...
eBook Problem Walk-Through MPI Incorporated has $3 billion in assets, and its tax rate is 25%....

eBook Problem Walk-Through MPI Incorporated has $3 billion in assets, and its tax rate is 25%. Its basic earning power (BEP) ratio is 9%, and its return on assets (ROA) is 5%. What is MPI's times-interest-earned (TIE) ratio? Do not round intermediate calculations. Round your answer to two decimal places.
TIE RATIO MPI Incorporated has $9 billion in assets, and its tax rate is 40%. Its...

TIE RATIO MPI Incorporated has $9 billion in assets, and its tax rate is 40%. Its basic earning power (BEP) ratio is 10%, and its return on assets (ROA) is 3%, what is MPI's times-interest-earned (TIE) ratio? Round your answer to two decimal places

TIE RATIO MPI Incorporated has $9 billion in assets, and its tax rate is 40%. Its...

TIE RATIO MPI Incorporated has $9 billion in assets, and its tax rate is 40%. Its basic earning power (BEP) ratio is 8%, and its return on assets (ROA) is 3%. What is MPI's times-interest-earned (TIE) ratio? Round your answer to two decimal places. x
MPI Incorporated has $4 billion in assets, and its tax rate is 40%. Its basic earning...

MPI Incorporated has $4 billion in assets, and its tax rate is 40%. Its basic earning power (BEP) ratio is 8%, and its return on assets (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 its management has developed a new operating plan that calls for a debt-to-capital ratio of 40%, which will result in annual interest charges of $390,000. The firm has...
MPI Incorporated has $7 billion in assets, and its tax rate is 35%. Its basic earning...

MPI Incorporated has $7 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 8%, and its return on assets (ROA) is 3%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet What is MPI's times interest-earned (TIE) ratio? Round your answer to two decimal places. х Check My Work Reset Problem Arial | 10 A...

Excel Online Structured Activity: TIE ratio MPI Incorporated has $3 billion in assets, and its tax...

Excel Online Structured Activity: TIE ratio MPI Incorporated has $3 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 10%, and its return on assets (ROA) is 4%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet What is MPI's times-interest-earned (TIE) ratio? Round your answer to two decimal places. Uhao Clipboard Font Allgh А...
Thomson Trucking has $21 billion in assets, and its tax rate is 25%. Its basic earning...

Thomson Trucking has $21 billion in assets, and its tax rate is 25%. Its basic earning power (BEP) ratio is 10%, and its return on assets (ROA) is 6.25%. What is its times-interest-earned (TIE) ratio? Round your answer to two decimal places.
Excel Online Structured Activity: TIE ratio MPI Incorporated has $5 billion in assets, and its tax...

Excel Online Structured Activity: TIE ratio MPI Incorporated has $5 billion in assets, and its tax rate is 35% Its basic earning power (BEP) ratio is 9%, and its return on assets (ROA) is 5%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet What is MPT's times interest earned (TIE) ratio? Round your answer to two decimal places. Check My Work...

MPI Incorporated has $3 billion in assets, and its tax rate is 35%. Its basic earning...

MPI Incorporated has $3 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 10%, and its return on assets (ROA) is 3%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.