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4.9 Broward Manufacturing recently reported the following information: Net income $597,000 ROA 10% Interest expense $220,890 Accounts payable and accruals $1,050,000 Broward's tax rate is 25%....

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Finance

4.9

Broward Manufacturing recently reported the followinginformation:

Net income$597,000
ROA10%
Interest expense$220,890
Accounts payable and accruals$1,050,000

Broward's tax rate is 25%. Broward finances with only debt andcommon equity, so it has no preferred stock. 40% of its totalinvested capital is debt, and 60% of its total invested capital iscommon equity. Calculate its basic earning power (BEP), its returnon equity (ROE), and its return on invested capital (ROIC). Do notround intermediate calculations. Round your answers to two decimalplaces.

BEP:   %

ROE:   %

ROIC:   %

Answer & Explanation Solved by verified expert
4.0 Ratings (455 Votes)
Basic Earning Power BEP Ratio Earnings Before TaxEBT Net Income 1 Tax Rate 5972000 1 025 597000 075 796000 Earnings Before Interest Tax EBIT EBT Interest Expenses 796000 220890 1016890    See Answer
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