Question

Asked Sep 15, 2019

50 views

If we know that a firm has a net profit margin of 4.5 % total asset turnover of 0.65, and a financial leverage multiplier of 1.47, what is its ROE? What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common stock equity?

Step 1

**Calculation of ROE:**

The ROE is **4.30%.**

Tagged in

Q: The Company dividend appears to grow smoothly at a constant rate of 5.5%. Analysts forecast that nex...

A: Recall the Gordan Growth Model with constant growth. Price at any time t is given byPt = Dt+1 / (ke ...

Q: Better Mousetraps has developed a new trap. It can go into production for an initial investment in e...

A: NPV refers to the Net Present Value of which is a distinction between cash inflows and cash outflows...

Q: Ed Draycutt is the engineering manager of Airway Technologies, a firm that makes computer systems fo...

A: Evaluate Ed’s analysis. Does Ed have the right expected NPV? What’s wrong with his analysis? Ed ha...

Q: What is the future value of the following set of cash flows 4 years from now? Assume interest rate 6...

A: Horizon is n = 4 years from now.FVn = The future value at the end of period n, of a cash flow occuri...

Q: Off-The-Books Investment Firm, LLC, has offered you an investment it says will return to you $20,000...

A: Calculate the annual rate of return as follows:

Q: 10 years ago, Sally Lucas Inc. earned $0.75 per share. Its earnings this year were $3.00 per share. ...

A: Given,10 Years ago, Earnings per Share (pv) = $0.75Current Year, Earning per Share (fv) = $3.00Time ...

Q: You have $150,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a ...

A: Let w be the proportion invested in stock X and the balance (1 - w) be invested in stock Y to creat...

Q: What is the future value of a 7%, 5-year ordinary annuity that pays $300 each year? If this were an ...

A: Calculation of future value of annuity:

Q: Grill Works and More has 8 percent preferred stock outstanding that is currently selling for $49 a s...

A: Calculation of Cost of Preferred Stock: