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If the company does not maintain a tie ratio of at least 5

The Morris Corporation has $800,000 of debt outstanding, and it pays an interest rate of 5% annually. Morris's annual sales are $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, then its bank will refuse to renew the loan and bankruptcy will result. What is Morris's TIE ratio?

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Finance Basics: If the company does not maintain a tie ratio of at least 5

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