Please need answer the financial accounting question Everest Industries has the following financial metrics:Operating Profit Margin = 6.5%Debt Burden = 0.85==Equity Financing = 70% of total assetsWhat asset turnover ratio is necessary to achieve a Return onEquity (ROE) of 20%?

Step 1: Define Return on Equity (ROE)Return on Equity (ROE) is a financial ratio that measures the…

Answered: Everest Industries has the following…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 6P

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Du Pont Analysis. Keller Cosmetics maintains an operating profit margin of 5% and asset turnover ratio of 3. a. what is ROA? b. If its debt-equity ratio is 1, its interest payments and taxes are each 8000, and EBIT is 20,000 what is its ROE? * I know ROA is Asset Turnover x OPM which gives me .15. How do I analyze this? Is it for every dollar spent on assets you get a return of 15%. Also How do I solve for b. Please give me step by step instructions. For the ROE, I was able to solve for NI given the EBIT, Interest Pay, and Tax. This is 4000. However I don't know how to solve for equity to find ROA. Can you give me step by step instructions/full explanations on how to calculate equity?
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Assume the following ratios are constant: Total asset turnover 2.6 Profit margin 6.6 % Equity multiplier 1.5 Payout ratio 25 % What is the sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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Assume the following ratios are constant. Total asset turnover 1.49 Profit margin 8.7% Equity multiplier 1.6 Payout ratio 55% What is the sustainable growth rate?
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Suppose a firm has the following information: Operatingcurrent assets = $2.7 million; operating current liabilities =$1.5 million; long-term bonds = $3 million; net plant andequipment = $7.8 million; and other long-term operating assets =$1 million. How much is tied up in net operating workingcapital (NOWC)? ($1.2 million) How much is tied up in total netoperating capital? ($10 million)

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Everest Industries has the following financial metrics: Operating Profit Margin = 6.5% Debt Burden = 0.85 == Equity Financing = 70% of total assets What asset turnover ratio is necessary to achieve a Return on Equity (ROE) of 20%?