Question

Helen Wiseman, owner of a convenience store, is meeting her banker and hopes to increase her working capital loan. She figures that an additional loan would increase her finance costs by an extra $10,000. Before seeing her banker, she asks her accountant to determine whether she would have difficulty servicing her debt with the additional finance costs.


With the following information, calculate the company’s TIE ratio and fixed-charges coverage ratio. If you were the banker, would you approve the loan? Why or whynot?


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  • CreatedDecember 03, 2014
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