Broward Manufacturing recently reported the following information:Net income $615,000ROA 10%Interest expense $202,950Accounts payable and accruals $950,000Broward’s tax rate is 25%. Broward finances with only debt and common equity, so it has no preferredstock. 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).
Broward Manufacturing recently reported the following information:Net income $615,000ROA 10%Interest expense $202,950Accounts payable and accruals $950,000Broward’s tax rate is 25%. Broward finances with only debt and common equity, so it has no preferredstock. 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
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Question
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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