please answer within the format by providing formula the detailed working Please provide answer in text (Without image) Please provide answer in text (Without image) Please provide answer in text (Without image) How do I find “Return on Equity” when all I have are these numbers: profit margin 8.90% capital intensity ratio 0.50 debt equity ratio 0.65 net income 100,000.00 dividends 47,500.00

please answer within the format by providing formula the detailed working Please provide answer in text (Without image) Please provide answer in text (Without image) Please provide answer in text (Without image) How do I find “Return on Equity” when all I have are these numbers: profit margin 8.90% capital intensity ratio 0.50 debt equity ratio 0.65 net income 100,000.00 dividends 47,500.00

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 4AP

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Define each of the following terms: Liquidity ratios: current ratio; quick, or acid test, ratio Asset management ratios: inventory turnover ratio; days sales outstanding (DSO); fixed assets turnover ratio; total assets turnover ratio Financial leverage ratios: debt ratio; times-interest-earned (TIE) ratio; EBITDA coverage ratio Profitability ratios: profit margin on sales; basic earning power (BEP) ratio; return on total assets (ROA); return on common equity (ROE) Market value ratios: price/earnings (P/E) ratio; price/cash flow ratio; market/book (M/B) ratio; book value per share Trend analysis; comparative ratio analysis; benchmarking DuPont equation; window dressing; seasonal effects on ratios
CONCEPTUAL: RETURN ON EQUITY Which of the following statements is most correct? (Hint: Work Problem 4-16 before answering 4-17, and consider the solution setup for 4-16 as you think about 4-17.) a. If a firms expected basic earning power (BEP) is constant for all of its assets and exceeds the interest rate on its debt, adding assets and financing them with debt will raise the firms expected return on common equity (ROE). b. The higher a firms tax rate, the lower its BEP ratio, other things held constant. c. The higher the interest rate on a firms debt, the lower its BEP ratio, other things held constant. d. The higher a firms debt ratio, the lower its BEP ratio, other things held constant. e. Statement a is false, but statements b, c, and d are true.
Define each of the following terms: Weighted average cost of capital, WACC; after-tax cost of debt, rd(1 – T); after-tax cost of short-term debt, rstd(1 – T) Cost of preferred stock, rps; cost of common equity (or cost of common stock), rs Target capital structure Flotation cost, F; cost of new external common equity, re
CALCULATING 3Ms COST OF CAPITAL In this chapter, we described how to estimate a companys WACC, which is the weighted average of its costs of debt, preferred stock, and common equity. Most of the data we need to do this can be found from various data sources on the Internet. Here we walk through the steps used to calculate Minnesota Mining Manufacturings (MMM) WACC. 3. Next, we need to calculate MMMs cost of debt. We can use different approaches to estimate it. One approach is to take the companys interest expense and divide it by total debt (which is the sum of short-term debt and long-term debt). This approach only works if the historical cost of debt equals the yield to maturity in todays market (i.e., if MMMs outstanding bonds are trading at close to par). This approach may produce misleading estimates in years in which MMM issues a significant amount of new debt. For example, if a company issues a great deal of debt at the end of the year, the full amount of debt will appear on the year-end balance sheet, yet we still may not see a sharp increase in annual interest expense because the debt was outstanding for only a small portion of the entire year. When this situation occurs, the estimated cost of debt will likely understate the true cost of debt. Another approach is to try to find this number in the notes to the companys annual report by accessing the companys home page and its Investor Relations section. Alternatively, you can go to other external sources, such as bondsonline.com, for corporate bond spreads, which can be used to find estimates of the cost of debt. Remember that you need the after-tax cost of debt to calculate a firms WACC, so you will need MMMs tax rate (which has averaged around 30% in recent years). What is your estimate of MMMs after-tax cost of debt?
As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and g = 8.00% (constant). Based on the DCF approach, what is the cost of common from retained earnings? Please show formula and answer
Assume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $0.80; P0 = $32.50; and g = 8.00% (constant). What is the cost of equity from retained earnings based on the DCF approach?
(part A is correct, I just need help with B, C, D, and E) A. Calculate the Weights for debt, common equity, and preferred equity. (round final answers to 4 decimal places) Debt: 0.4 (correct) Preferred Equity: 0.04 (correct) Common Equity: 0.56 (correct) B. Calculate the cost of debt % C. Calculate the cost of preferred equity % D. calculate the cost of common equity % E. What is the firms weighted average cost of capital (WACC)%
For private firm, Altman adjusts the public model by changing the numerator for the variable X4 from the market value of equity to the book value of equity. The revised model follows:Z = .717 (X1) + .847 (X2) + 3.11 (X3) + .420 X4 + .998 (X5) Where:X1 = Net Working Capital/Total assetsX2 = Retained Earnings/Total AssetX3 = Earnings before interest and taxes/Total AssetsX4 = Book value of equity/Book value of Total LiabilitiesX5 = Sales/Total Assets The model predict bankruptcy when Z < 1.23. The range between 1.23 and 2.90 is labeled the “grey area”.The following table presents the independent variables from the three companies at the end of 2011. a) Calculate Altman Z-score for each company and interpret the results.b) Calculate the debt ratio for each of the companies.c) Explain the impact of increase debt ratio to Altman Z-score.
you have been provided with the following data D1=$1.27 PO=60 and G=8 constant. What is the cost of equity from retained earnings based on the DCF approach?
According to the simplified Brennan Lally CAPM, what is the cost of equity for A Ltd? Using the cost of debt, cost of equity, market value of debt and market value of equity given in the table given, what is the weighted average cost of capital (WACC) for B Ltd? Thank you!
Assuming yourself to be Anna, narrate what you would have read in the file. Your narrative should include answers to the following: Note: 1 Retention ratio = 1 – Dividend payout ratio a)What is the difference between the required return on equity and actual return on equity? Can they be equal? Which one would be used to compute the stock price?
.Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: rRF = 4.10%; RPM = 5.25%; and b = 0.70. Based on the CAPM approach, what is the cost of equity?