Answer:
TIE = 4,985.71
Explanation:
[tex]TIE = \frac{EBIT}{interest \: expense}[/tex]
net income / (1 - tax-rate) = Earnings before taxes
3,000 / 0.7 = 4,285.71
Earnigns before taxes + interest = EBIT (earnings before interest and taxes)
4,285.71 + 700 = 4,985.71
Manufacturer's Inc company's estimated times-interest-earned ratio is 7 times, assuming its average tax rate is 30% and fixed interest charges are $700.
The Times-interest-earned ratio is a valuable measure for determining a company's ability to repay the interest imposed on any sort of borrowing. A high ratio implies that the company's earnings are sufficient to repay its debt obligations.
Time-Interest-Earned ratio = [tex]\dfrac{\rm\,EBIT}{\rm\,Interest\,Charges}[/tex]
Given that the net income is $3,000 which includes the interest charges and tax expense deductions. So, to get Earnings before Interest and Taxes we have to add back interest charges and tax expenses.
[tex]\rm\,EBIT = \rm\,Net \,income + Interest\,Charges + Taxes= \$3,000 + \$700 + \$1286= \$ 4,986[/tex]
= [tex]\rm\,Times\, Interest\,Earned\,ratio =\\\\ \dfrac{\rm\,EBIT}{\rm\,Interest\,Charges}\\\\= \dfrac{\rm \$\,4,986}{\rm\$700}\\\\ = \rm\,7\,times[/tex]
Hence, the manufacturer's Inc company's estimated times-interest-earned ratio is 7 times.
To learn more about the times- interest earned ratio, refer to the link:
https://brainly.com/question/6480565
