Alumbat Corporation has $800,000 in debt outstanding, and pays an interest rate of 10 percent annually on its bank loan. 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. Alumbat's currenttimes interest earnedratio is:

A. ?2.4.
B. ?3.4.
C. ?3.6.
D. ?4.0.
E. ?5.0.


Answer: E

Business

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