As CFO of Nile Holdings, a carpet wholesaler, you have the following information as of December 2011:

-Assume Nile raises $100 million of new debt at the end of 2011,at an interest rate of 7%.
a.Calculate the firm's pro forma 2012 times interest earned (TIE)ratio.
b.Calculate the percentage EBIT can fall (below expected EBIT)before interest coverage dips below 1.0.

Question

As CFO of Nile Holdings, a carpet wholesaler, you have the following information as of December 2011:
 
-Assume Nile raises $100 million of new debt at the end of 2011,at an interest rate of 7%.
a.Calculate the firm's pro forma 2012 times interest earned (TIE)ratio.
b.Calculate the percentage EBIT can fall (below expected EBIT)before interest coverage dips below 1.0.

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The Answer of As CFO of Nile Holdings, a carpet wholesaler, you have the following information as of December 2011:
 
-Assume Nile raises $100 million of new debt at the end of 2011,at an interest rate of 7%.
a.Calculate the firm's pro forma 2012 times interest earned (TIE)ratio.
b.Calculate the percentage EBIT can fall (below expected EBIT)before interest coverage dips below 1.0.

As CFO of Nile Holdings, a Carpet Wholesaler, You Have