The Jacks corporation reported the following: i. Net income $ 840,000.00 ii. Accounts payable and accruals $1,270,650.00 iii. Interest expense $ 305,000.00 iv. Return on asset 16% v. Tax rate 30% As the company’s business analyst, you know that Jacks finances only with debt and equity. 45% of its total invested capital is debt. Calculate and interpret the basic earnings power ratio, the return on equity, and the return on invested capital. Please show work
The Jacks corporation reported the following:
i. Net income $ 840,000.00
ii. Accounts payable and accruals $1,270,650.00
iii. Interest expense $ 305,000.00
iv. Return on asset 16%
v. Tax rate 30%
As the company’s business analyst, you know that Jacks finances only with debt and equity. 45%
of its total invested capital is debt. Calculate and interpret the basic earnings power ratio, the
return on equity, and the return on invested capital.
Please show work
Ratio Analysis: This is the process of computing, determining, and presenting the relationship of related items and groups of items of the financial statements. It is the systematic use of ratio to interpret the financial statement in terms of the operating performance and financial position of a firm.
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