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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).

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).

Financial Reporting, Financial Statement Analysis and Valuation
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter14: Valuation: Market-based Approach
Section: Chapter Questions
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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).

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
Transcribed Image 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
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