The Manor Corporation has $700,000 of debt outstanding, and it pays an interest rate of 8 percent annually. Manor's annual sales are $3.5 million, its average tax rate is 35 percent, and its net profit margin on sales is 3 percent. If the company does not maintain a TIE ratio of at least 6 times, its bank will refuse to renew the loan, and bankruptcy will result. What is Manor's TIE ratio? Round your answer to two decimal places.
I know that I need to use the profit margin to compute net income. Then work backward to compute EBT (taxable income) by dividing net income by (1-T), but I am getting a crazy answer.