BEP, ROE, AND ROIC Broward Manufacturing recently reported the following information: Net income $615,000 ROA 10% Interest expense $202,950 Accounts payable and accruals $950,000 Broward’s tax rate is 25%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, and 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).
BEP, ROE, AND ROIC Broward Manufacturing recently reported the following information: Net income $615,000 ROA 10% Interest expense $202,950 Accounts payable and accruals $950,000 Broward’s tax rate is 25%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, and 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).
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
BEP, ROE, AND ROIC Broward Manufacturing recently reported the following information: Net income $615,000
Transcribed Image Text:Show Notebook
What are Edelman's market/book and its EV/EBITDA ratios?
PRICE/EARNINGS RATIO A company has an EPS of $2.40, a book value per share of $21.84,
and a market/book ratio of 2.7X. What is its P/E ratio?
4-5
DUPONT AND ROE A firm has a profit margin of 3% and an equity multiplier of 1.9. Its
sales are $150 million, and it has total assets of $60 million. What is its ROE?
4-6
ROE AND ROIC Baker Industries's net income is $24,000, its interest expense is $5,000, and
its tax rate is 25%. Its notes payable equals $27,000, long-term debt equals $75,000, and
common equity equals $250,000. The firm finances with only debt and common equity, so
it has no preferred stock. What are the firm's ROE and ROIC?
ate
4-7
DUPONT AND NET INCOME Precious Metal Mining has $17 million in sales, its ROE is
17%, and its total assets turnover is 3.2X. Common equity on the firm's balance sheet is
50% of its total assets. What is its net income?
4-8
4-9
BEP, ROE, AND ROIC Broward Manufacturing recently reported the following information:
Net income
$615,000
ROA
10%
Interest expense
$202,950
Accounts payable and accruals
$950,000
Broward's tax rate is 25%. Broward finances with only debt and common equity, so it has
no preferred stock. 40% of its total invested capital is debt, and 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).
M/B, SHARE PRICE, AND EV/EBITDA You are given the following information: Stockholders'
equity as reported on the firm's balance sheet
mon shares outstanding
value of totaldebt is $7 billion, the firm has cash and equivalents totaling $250 million, and
the firm's EBITDA equals $2 billion. What is the price of a share of the company's common
stock? What is the firm's EV/EBITDA?
4-10
$6.5 billion, price/earnings ratio = 9, com-
2.0. The firm's market
180 million, and market/book ratio
%3D
4-11
RATIO CALCULATIONS Assume the following relationships for the Caulder Corp.:
1.3X
Sales/Total assets
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!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education