Answered: What are Duffert's ROE and ROIC?

Business

Finance

What are Duffert's ROE and ROIC?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter3: Analysis Of Financial Statements

Section: Chapter Questions

Problem 1STP

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Concept explainers

Risk Analysis

Risk management is the entire walkthrough process of helping the organization manage risks or avoid them altogether. It is an in-depth study to determine the risks and uncertainties faced by the business and how these impact the objectives and outcomes of the business. Risk analysis is a procedure of risk assessment followed by the management of an organization to avoid risks that may harm the functioning and efficiency of the company.

Question

Duffert Industries has total assets of $970,000 and total current liabilities (consisting only of accounts payable and accruals) of $115,000. Duffert finances using only long-term debt and common equity. The interest rate on its debt is 9% and its tax rate is 25%. The firm's basic earning power ratio is 17% and its debt-to capital rate is 40%. What are Duffert's ROE and ROIC? Do not round your intermediate calculations.

Group of answer choices

10.90%; 12.44%

13.63%; 14.46%

15.54%; 16.06%

8.86%; 12.73%

12.68%; 14.03%.

Stepwise pls correct.

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