ABC has net operating assets (NOA) of JPY (¥) 56,000 million. The company’s return on common equity (ROCE) is 16%, its return on net operating assets (RNOA) is 12%, its operating profit margin (PM) is 18%, its cost of debt (before tax) is 4% and its tax rate 30%. (i) Calculate ABC’s net financial leverage, to 3 decimal places. (ii) Calculate ABC's operating asset turnover (ATO), to 3 decimal places.
ABC has net operating assets (NOA) of JPY (¥) 56,000 million. The company’s return on common equity (ROCE) is 16%, its return on net operating assets (RNOA) is 12%, its operating profit margin (PM) is 18%, its cost of debt (before tax) is 4% and its tax rate 30%. (i) Calculate ABC’s net financial leverage, to 3 decimal places. (ii) Calculate ABC's operating asset turnover (ATO), to 3 decimal places.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABC has net operating assets (NOA) of JPY (¥) 56,000 million.
The company’s return on common equity (ROCE) is 16%, its return on net operating assets (RNOA) is 12%, its operating profit margin (PM) is 18%, its cost of debt (before tax) is 4% and its tax rate 30%.
(i) Calculate ABC’s net financial leverage, to 3 decimal places.
(ii) Calculate ABC's operating asset turnover (ATO), to 3 decimal places.
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