Question
4. A firm has a profit margin of 2% and an equity multiplier of 2.9. Its sales are $200 million, and it has total assets
4. A firm has a profit margin of 2% and an equity multiplier of 2.9. Its sales are $200 million, and it has total assets of $120 million. What is its ROE? Do not round intermediate calculations. Round your answer to two decimal places.
5. Assume the following relationships for the Caulder Corp.: Sales/Total assets 1.3 Return on assets (ROA) 8.0% Return on equity (ROE) 14.0% Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places.
Profit margin: %
Debt-to-capital ratio: %
6.The W.C. Pruett Corp. has $550,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 12%. In addition, it has $600,000 of common stock on its balance sheet. It finances with only debt and common equity, so it has no preferred stock. Its annual sales are $2.64 million, its average tax rate is 25%, and its profit margin is 7%. What are its TIE ratio and its return on invested capital (ROIC)? Round your answers to two decimal places.
TIE:
ROIC: %
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