Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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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), itsreturn on equity (ROE), and its return on invested capital
(ROIC).
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
(ROIC).
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