BEP, ROE, AND ROIC
Question # 00494826
Posted By:
Updated on: 03/03/2017 12:26 PM Due on: 03/05/2017
BEP, ROE, AND ROIC
Broward Manufacturing recently reported the following information:
|
Net income |
$325,000 |
|
ROA |
10% |
|
Interest expense |
$126,750 |
|
Accounts payable and accruals |
$950,000 |
Broward's tax rate is 30%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, while 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Round your answers to two decimal places.
|
BEP |
% |
|
ROE |
% |
|
ROIC |
% |
RATIO CALCULATIONS
Assume the following relationships for the Caulder Corp.:
|
Sales/Total assets |
1.6x |
|
Return on assets (ROA) |
5% |
|
Return on equity (ROE) |
14% |
- Calculate Caulder's profit margin assuming the firm
uses only debt and common equity, so total assets equal total invested
capital. Round your answer to two decimal places.
% - Calculate Caulder's debt-to-capital ratio assuming the
firm uses only debt and common equity, so total assets equal total
invested capital. Round your answer to two decimal places.
%
-
Rating:
/5
Solution: BEP, ROE, AND ROIC