TU Exam - 2076 ( BBS 3rd year) 12. Kantipur Cafe has Rs 500,000 of debt outstanding, and it pays an interest rate of 10 percent annually. Its annual sales are Rs 2 million, its average tax is 30 percent and its net profit margin on sales is 5 percent. If the company doesnot maintain a times interest earned ( TIe ) ratio of at least 5 times, its bank will refuse to renew the loan and bankruptcy will result. a. What is Kantipur Cafe's TIe Ratio ? Is the bank likely to renew the loan? b. By what percentage, net profit margin should increase in order to get loan renewed? Given, Total Debt Outstanding = Rs 500,000 Interest Amount = 10 % of Rs 500,000 ...
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