Question
Please answer these two questions completely and shows the clear step. Thanks 1. Company A discloses the following information: Return on equity = 15 percent
Please answer these two questions completely and shows the clear step. Thanks
1. Company A discloses the following information:
Return on equity = 15 percent
Net operating and investment profit after taxes (NOPAT + NIPAT) = 500,000
Business assets = 4,000,000
Effective interest rate after tax = 8 percent
Company As financial leverage (debt-to-equity ratio) is
a.Between 40 and 49.9 percent
b.Between 50 and 59.9 percent
c.Between 60 and 69.9 percent
d.Between 70 and 79.9 percent
(The solution says B, BUT please shows the correct step)
2. Company B discloses the following information:
Return on net operating assets = 10 percent
Net operating profit after taxes = 500,000
Revenue = 3,000,000
Equity = 2,000,000
Company Bs operating asset turnover is
a.Between 40 and 49.9 percent
b.Between 50 and 59.9 percent
c.Between 60 and 69.9 percent
d.Between 70 and 79.9 percent
(The solution says C, BUT please shows the correct step)
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