Based on the information given Jack's times-interest earned (TIE) ratio is 3.28.
BEP = EBIT ÷ Total Assets
12% = EBIT ÷ $18 billion
EBIT = 12% × $5 billion
EBIT= $0.6 billion
ROA = Net Income ÷ Total Assets
5% = Net Income ÷ $5 billion
Net Income = 5% × $5 billion
Net income= $0.25 billion
Earning before tax:
Earning before tax= Net income ÷ (1 - tax)
Earning before tax= $0.25 ÷ (1 - 0.40)
Earning before tax= $0.25 ÷ 0.60
Earning before tax= $0.417 billion
Interest Expense:
Interest Expense= EBIT - EBT
Interest Expense= $0.6 billion - $0.417billion
Interest Expense= $0.183 billion
Times interest earned ratio:
Times interest earned ratio= EBIT ÷ Interest expense
Times interest earned ratio= $0.6 billion ÷ $0.183 billion
Times interest earned ratio= 3.28
Inconclusion Jack's times-interest earned (TIE) ratio is 3.28.
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