BEP, ROE, AND ROIC 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 25%. 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).
Extracted text: Show Notebook What are Edelman's market/book and its EV/EBITDA ratios? PRICE/EARNINGS RATIO A company has an EPS of $2.40, a book value per share of $21.84, and a market/book ratio of 2.7X. What is its P/E ratio? 4-5 DUPONT AND ROE A firm has a profit margin of 3% and an equity multiplier of 1.9. Its sales are $150 million, and it has total assets of $60 million. What is its ROE? 4-6 ROE AND ROIC Baker Industries's net income is $24,000, its interest expense is $5,000, and its tax rate is 25%. Its notes payable equals $27,000, long-term debt equals $75,000, and common equity equals $250,000. The firm finances with only debt and common equity, so it has no preferred stock. What are the firm's ROE and ROIC? ate 4-7 DUPONT AND NET INCOME Precious Metal Mining has $17 million in sales, its ROE is 17%, and its total assets turnover is 3.2X. Common equity on the firm's balance sheet is 50% of its total assets. What is its net income? 4-8 4-9 BEP, ROE, AND ROIC 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 25%. 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). M/B, SHARE PRICE, AND EV/EBITDA You are given the following information: Stockholders' equity as reported on the firm's balance sheet mon shares outstanding value of totaldebt is $7 billion, the firm has cash and equivalents totaling $250 million, and the firm's EBITDA equals $2 billion. What is the price of a share of the company's common stock? What is the firm's EV/EBITDA? 4-10 $6.5 billion, price/earnings ratio = 9, com- 2.0. The firm's market 180 million, and market/book ratio %3D 4-11 RATIO CALCULATIONS Assume the following relationships for the Caulder Corp.: 1.3X Sales/Total assets