Question
14. Humphrey Hotels' EBIT is $40 million. The company's times-interest-earned (TIE) ratio is 20, its tax rate is 50%, and its basic earning power
14. Humphrey Hotels' EBIT is $40 million. The company's times-interest-earned (TIE) ratio is 20, its tax rate is 50%, and its basic earning power (BEP EBIT/TA) ratio is 20%. What is the company's return on assets (ROA)? 15. A firm has a debt/equity ratio of 50 percent. Currently, it has interest expense of $500,000 on $5,000,000 of total debt outstanding, and a tax rate of 40 percent. If the firm's ROA is 3 percent, by how many percentage points is the firm's ROE greater than its ROA?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
