Question
Your company makes fiber-optic components for the airline industry. The company has total capital employed of 100m. Half of the capital (50%) is a bank
Your company makes fiber-optic components for the airline industry. The company has total capital employed of 100m. Half of the capital (50%) is a bank loan (and the interest rate is 10%). You must subtract this from the operating profit. Last year the operating profit was 20m. The operating profitability (ROI) of the company would be the profit gained for each unit of input (so for each euro invested in the company, how much did we gain?). Corporate Tax IS 30%
You can now calculate the (ROI) - operating profit/total capital
You can now calculate the net profitability (ROE) - net profit/social capital
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started