Question
Broward Manufacturing recently reported the following information: Net income.....................................$615,000 ROA..........................................................10% Interest expense............................$202,950 Accounts payable and accruals...$950,000 Browards tax rate is 40%. Broward finances with only
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 40%. 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 return on equity (ROE), and its return on invested capital (ROIC).
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Basic Earning Power BEP Ratio Earnings Before TaxEBT Net Income 1 Tax Rate 615000 1 04 615000 06 10...Get Instant Access to Expert-Tailored Solutions
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