View Full Version : BEP ratio
1017tweety
Sep 10, 2009, 03:26 PM
Total assets were 460,000 its operating cost were 362,500 and it interest charges were 12,500 what was the firm's- interest-earned (TIE)ratio?
ArcSine
Sep 10, 2009, 04:02 PM
Not enough info provided. TIE is
\frac{\text{EBIT}}{\text{Interest Expense}}
where EBIT is Net Income Before Interest Expense and Taxes.
rehmanvohra
Sep 12, 2009, 12:06 AM
total assets were 460,000 its operating cost were 362,500 and it interest charges were 12,500 what was the firm's- interest-earned (TIE)ratio?
I think tweety made a mistake in the opening line. It should be total sales and not assets. If this is the case, then the formula given by Arcsine can be applied.
ArcSine
Sep 12, 2009, 05:31 AM
I think tweety made a mistake in the opening line. It should be total sales and not assets.
That certainly looks like a reasonable possibility. When I originally opened with "not enough info" I was thinking maybe something like "asset turnover" had been omitted--given the asset turnoover ratio, along with total assets, the sales could be derived.
But a simple erroneous replacement of "assets" for "sales" by Tweety seems like a good possibility as well. In any event, Tweety, check your question and post back.