The gross profit margin (gross profit/sales) ofABC, Inc. is 0.25, its operating profit margin(EBIT/sales) is 14%, its TATO ratio is 1.50x, andits COGS is $600,000. ABC's tax rate is 40%. If thefirm is an all-equity firm, calculate thecompany's ROA and ROE.

Step 1: Determine SalesWe must compute sales using the COGS (Cost of Goods Sold) and the gross…

Answered: The gross profit margin (gross…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Help me
The Tip-Top Paving Co. has an equity cost of capital of 16.97%. The debt to value ratio is .6, the tax rate is 34%, and the cost of debt is 11%. What is the cost of equity if Tip-Top was unlevered? O a. 10.0%. O b. 16.0%. C. 12.0%. O d. 14.0%
Give typing answer with explanation and conclusion Fama's Llamas has a weighted average cost of capital of 11.5 per cent. The company's cost of equity is 16 per cent, and its cost of debt is 8.5 per cent. The tax rate is 35 per cent. What is Fama's debt–equity ratio?
give me answer
Assume the following relationships for the Caulder Corp.: Sales/Total assets 2.2x Return on assets (ROA) 6% Return on equity (ROE) 15% a. 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. % b. Calculate Caulder's 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 answer to two decimal places. %
The ABCCompany has a cost of equity of 21.2 percent, a pre-tax cost of debt of 5.2percent, and a tax rate of 30 percent. What is the firmâ€™s weighted average costof capital if the proportion of debt is 65.6%?Note: Enter your answer rounded off to two decimal points.Do not enter % in the answer box. For example, if your answer is 0.12345 thenenter as 12.35 in the answer box.
The Tailgate Store has a cost of equity of 8.6 percent. The company has an after-tax cost of debt of 4.5 percent, and the tax rate is 39 percent. If the company's debt-equity ratio is .65, what is the weighted average cost of capital? 8.85% 9.10% 6.55% 7.15% 6.98%
You are given the financial information for the Unic Company: Earnings Before Interest and Tax (EBIT) = $126.58 Corporate tax rate (TC) = 0.21 Debt (D) = $500 Unlevered cost of capital (RU) = 0.20 The cost of debt capital is 10 percent. Question: Determine the value of Unic Company equity? Determine the cost of equity capital for Unic Company? Determine the WACC for Unic Company?
Portneuf Industries has a debt-equity ratio of 1.5. Its WACC is 8.4%, and its cost of debt is 5.9%. The corporate tax rate is 35%. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.) a. What is the company's cost of equity capital? Cost of equity capital b. What is the company's unlevered cost of equity capital? Unlevered cost of equity capital 2.65 % c-1. What would the cost of equity be if the debt-equity ratio were 2? Cost of equity 2.65 % Cost of equity 0.73 % c-2. What would the cost of equity be if the debt-equity ratio were 1.0? Cost of equity c-3. What would the cost of equity be if the debt-equity ratio were zero? 11.5% %
Given the information below on peer companies A-E, calculate the beta for company F if it has net debt/equity of 0.72 and a tax rate of 25%. 0.98 0.95 1.02 O 1.06 Company ABCDE Betal 1.23 1.18 1.05 0.95 0.91 Net debt / equity 1.45 1.24 0.85 0.59 0.45 tax rate 25% 25% 25% 25% 25%
Answer all the questions
Using the DuPont method, evaluate the effects of the following relationships for the Butters Corporation. A.Butters Corporation has a profit margin of 5.5 percent and its return on assets (investment) is 8.75 percent. What is its assets turnover? Round your answer to 2 decimal places. ______ times B.If the Butters Corporation has a debt-to-total-assets ratio of 65.00 percent, what would the firm’s return on equity be? Note: Input your answer as a percent rounded to 2 decimal places. C.What would happen to return on equity if the debt-to-total-assets ratio decreased to 60.00 percent? Input your answer as a percent rounded to 2 decimal places.

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

The gross profit margin (gross profit/sales) of ABC, Inc. is 0.25, its operating profit margin (EBIT/sales) is 14%, its TATO ratio is 1.50x, and its COGS is $600,000. ABC's tax rate is 40%. If the firm is an all-equity firm, calculate the company's ROA and ROE.