A company has a tax burden ratio of 0.4, a compound leverage factor of 0.6, a return on sales of 0.9, a leverage ratio of 0.7, and an asset turnover of 0.3. What is the ROE for the company? A.) 2.90% B.) 4.54% C.) 6.48% D.) 11.4% E.) None of the above

A company has a tax burden ratio of 0.4, a compound leverage factor of 0.6, a return on sales of 0.9, a leverage ratio of 0.7, and an asset turnover of 0.3. What is the ROE for the company? A.) 2.90% B.) 4.54% C.) 6.48% D.) 11.4% E.) None of the above

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: The Oriole Timber Company has the following ratios: Net sales/Total assets-2.76; ROA-9.74 % ;…

A: Net sales/Total assets = 2.79ROA = 9.74%ROE = 15.7%The profit margin is

Q: Current Ratio. What effect would the following actions have on a firm's current ratio? Assume that…

A: The current ratio is a financial metric that measures a company's ability to cover its short-term…

Q: A company has a profit margin of 25%, an asset turnover ratio of 1.5, and an equity multiplier ratio…

A: Return on equity is a ratio which measures the return to company in terms of equity. It indicates…

Q: Firm J has net income of $124,800, sales of $960,000, and average total assets of $640,000.…

A: Return on investment is calculated by dividing the Operating Income by the Average assets. Return on…

Q: A firm has a tax burden of 0.7. a leverage ratio of 1.3, an interest burden of .8, and a…

A: We need to use Du Pont method to calculate ROE. The equation isROE = Tax burden ratio*Interest…

Q: Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been…

A: The Capital Asset Pricing Model (CAPM) is a financial model used to determine the expected return on…

Q: A firm has a tax burden ratio of 0.85, a leverage ratio of 1.5, an interest burden of 0.9, and a…

A: The conceptual formula is represented mathematically:

Q: I need full details solution with explanation.

A: The primary driver for each company having a higher return than the industry can be determined by…

Q: Consider a retail firm with a net profit margin of 3.61 % a total asset turnover of 1.75, total…

A: Step 1: The calculation of the return on equity AB1Net profit margin3.61%2Total asset…

Q: Hamada’s equation can be used to estimate the change of beta resultant from a change in leverage.…

A: The problem is asking us to calculate the unlevered beta of a company using Hamada's equation. The…

Q: Company X has a profit margin of 0.08, asset turnover of 1.3, and equity multiplier of 4.0. Which of…

A: Return on Equity (ROE) may be a money related metric that assesses a company's productivity in…

Q: provide answer with explanation

A: To find the ROE, we first need to determine the firm's net income. Given the times interest earned…

Q: Need correct answer the question

A: The problem involves the determination of the ROA or Return on Assets. ROA refers to a financial…

Q: The company’s ratios are: Current ratio = 1.58% Quick ratio = 1.53% operating margin = 3.49%…

A: The current ratio of a company shows whether it can pay-off the short-term debt from its current…

Q: What is the cost of equity for a firm where the required return on assets is 15.71%, the cost of…

Q: consider a company with ROE of 14.5% and a profit margin of 6.5%. if the total asset turnover is 1.8…

A: Debt equity ratio is a leverage ratio. It gives relative measure of debt to equity. Here Dupont…

Q: Trout and the market data of Salmon for the weights in the weighted average cost of capital: If the…

A: Given Data: Book valueDebt 7896109Equity4003759Cost of Debt = 10.3%Cost of Equity = 14.38%

Q: You calculate that a firm has a total asset turnover of 0.12 and a profit margin of 0.92. If the…

A: ROE = Net profit margin × Asset turnover ratio × equity multiplier 0.26 = 0.92 × 0.12 ×equity…

Q: Patel Company has a return on assets of 4.5% a) Explain the meaning of this result. b) Is Patel…

A: Return on Assets: ROA is Return (i.e., Firm's Net Income) on Total Assets which shows the earnings…

Q: Assume that your firm has a return on assets of 14.7%, sales of $16,625,000, total assets of…

A: Here, Return on Assets14.70%Sales $ 1,66,25,000.00Total Assets $ 47,50,000.00Return on…

Q: If Roten Rooters, Inc., has an equity multiplier of 1.58, total asset turnover of 1.80, and a profit…

A: Equity multiplier = 1.58Total asset turnover = 1.80Profit margin = 6.8 %

Q: calculate the Economic Value Added for company XYZ Ltd:

A: Economic value added is the equivalent of calculating a company's profit margin against its cost of…

Q: Although Company A and Company B have similar returns on 口 equity, what is the primary driver for…

A: ROE or return on equity measures a firm's profitability. It assesses the efficiency of a firm in…

Q: ive typing answer with explanation and conclusion Fama's Llamas has a weighted average cost of…

A: Weighted average cost of capital is total cost of financing the capital of the company. It includes…

Q: I want to answer the question

A: To find the firm's return on assets (ROA), we can use the following formula:ROA=Total AssetsNet…

Q: A firm had a debt ratio of 0.85. The pretax cost of debt is 8% and the reqiured return on asset is…

A: Business uses several sources of finance in its business. It may be debt funds or equity funds.…

Q: need help with this question please

A: Step 1: Understanding Times Interest Earned (TIE) RatioTIE Ratio = Earnings Before Interest and…

Q: y profit margin is 0.6 and the current ratio is 0.6, is it advisable to invest in

A: Profit margins and liquidity is very important parameter for company and they must be good and…

Q: What is the ROE for a firm with a times interest earned ratio of 2, a tax liability of $1 million,…

A: Variables in the question:Times interest earned ratio=2Tax liability=$1 millionInterest…

Question

Give typing answer with explanation and conclusion

_____ 2.) A company has a tax burden ratio of 0.4, a compound leverage factor of 0.6, a return on sales of 0.9, a leverage ratio of 0.7, and an asset turnover of 0.3. What is the ROE for the company?

A.) 2.90%

B.) 4.54%

C.) 6.48%

D.) 11.4%

E.) None of the above

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1 Introduction

VIEW

Step 2 Working Note #:-

VIEW

Step 3 Final Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Your company has a ROE of 18.5 which is very good for your industry. The company has an equity multiplier of 2.3 and a total asset turnover of 1.2. Both of these are higher than the industry average. What does this tell you about your company?
Company X has a cost of equity of 16.31% and a pretax cost of debt of 7.8%. The debt-equity ratio is 0.56 and the tax rate is 21%. What is the unlevered cost of capital? A )14.01% b) 13.85% c) 13.70% D) 14.08% E)14.26%
Firm K has a margin of 9%, turnover of 1.4, and sales of $1,610,000. Required: Calculate Firm K's net Income, average total assets, and return on Investment (ROI). Choose Factors: Choose Numerator: Net Income * Choose Factors: X Average Total Assets /Choose Denominator: = 1 Return on Investment Choose Numerator: /Choose Denominator: 1 1 Net Income Net Income Average Total Assets Average Total Assets 0 Return on Investment Return on Investment 0
* A company provided the following information: ROA= 15% Financial Leverage Ratio 1.8 What is the company's financial leverage percentage? (Round your answe
If financial leverage of a firm is 4, Interest 6,00,000, Operating Leverage is 3, Variable cost to sales is 66.66%, Income tax rate is 30%, Number of Equity Shares 1, 00, 000. Calculate fixed cost and EPS of the firms. (For your reference, OL = Contribution/EBIT; FL = EBIT/EBT and CL = OL*FL)
Sales/Total assets Return on assets (ROA) 1.8x 8.0% Return on equity (ROE) 15.0% Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: Debt-to-capital rabo:
If a firm's net profit margin is 4%, its total asset turnover is 1.8 times, and its debt ratio is 40%, its return on equity is: 15.00% None of the values in this list are correct. 12.86% 11.25% 12.00% 09.38%
Problem solve this problem
You've collected the following information about Hendrix Guitars, Incorporated: Profit margin Total asset turnover Total debt ratio Payout ratio 1 T Sustainable growth rate - I 4.41% 3.20 .28 26% What is the sustainable growth rate for the company? Note: Do not round intermediate calculations and enter your answer as a percent roundec Answer is complete but not entirely correct. 11.75 %
4. Rivoli Inc. hired you as a consultant to help estimate its cost of capital. You have been provided with the following data: D0 = $0.80; P 0 = $25.00; and g = 8.00% ( constant). Based on the DCF approach, what is the cost of equity from retained earnings? Do not round your intermediate calculations. a . 9.85% b. 14.32% c. 11.46% d . 9.74% e. 13.17%