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?

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?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter12: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 2STP

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