Homework Answers
The answer is d. EBIT/Interest
It indicates the company's ability to meet its interest payment. Assuming if the company has huge long term debt then it would be also required to shell out more money to meet its interest payment, this would reflect in the ratio EBIT/Interest.
This gives a relative measurement to investor of how much debt is there on balance sheet and also if the debt is in such excess that it threats the solvency of the company.
Add Answer to:
4. In the 5-Stage DuPont ROE formula, which of the following stages is considered to be...
4. In the 5-Stage DuPont ROE formula, which of the following stages is considered to be...
4. In the 5-Stage DuPont ROE formula, which of the following stages is considered to be a relative measurement of how much long term debt there is on the balance sheet (i.e. a solvency ratio): NI / SE, or the return on equity NI / Sales, or the profit margin EBIT / Sales, or the operating margin EBIT / Interest, or the times interest earned ratio TA / SE or the leverage ratio
Problem 4-6: DuPont and ROE A firm has a profit margin of 2% and an equity...
Problem 4-6: DuPont and ROE A firm has a profit margin of 2% and an equity multiplier of 2.0. Its sales are $100 million, and it has total assets of $50 million. What is its ROE? Problem 4-13: Return on equity Midwest Packaging's ROE last year was only 3%, but its management has developed a new operating plant that calls for a total debt ratio of 60%, which will result in annual interest charges of $300,000. Management projects an EBIT...
the DuPont formula relates return on equit The DuPont formula relates return on equity (= Net...
the DuPont formula relates return on equit
The DuPont formula relates return on equity (= Net income, - Stockholders equity) to the company's net profit margin (= Net income Sales), asset turnover (= Sales + Total assets), and equity multiplier (= Total assets + Stockholders equity). This Company is in an industry where the average net profit margin is 6.19%, the debt-to-asset ratio (= Debt + Total assets) is 27.9%, and return on equity is 20.22%. Find below the Company's...
No need for explanation You are trying to compare two six year investment ideas; both ideas...
No need for explanation
You are trying to compare two six year investment ideas; both ideas require a $12,500 investment today (T-0). Investment A will grow to $50,000 at the end of year 6 (T-ó), while Investment B will grow to $25,000 at the end of year 6 (T=6). Estimate the annualized return for each investment using the Rule of 72, Next, find the Compound Annual Growth Rate (i.e. geometric average) for each investment, which we learned is more precise...
MUST SHOW ALL WORK The DuPont formula relates return on equity (Net income + Stockholders equity)...
MUST SHOW ALL WORK The DuPont formula relates return on equity (Net income + Stockholders equity) to the company's net profit margin- Net income sales asset turnover (SalesTotal assets and equity multiplier (Total assets Stockholders equity). This Company is in an industry where the average net profit margin is 6.19%, the debt-to-asset ratio (Debt. Total assets) is 27.9%, and return on equity is 20.22% Find below the Company's financial statements for year 2525 Balance Sheet, 12/31/2525 Income, 1/1 - 12/31/2525...
Assume you are a sell-side analyst and you cover the widget industry. In 2018, Big Widget...
Assume you are a sell-side analyst and you cover the widget industry. In 2018, Big Widget Company decided to double manufacturing capacity by issuing debt in order to capitalize on the growing demand for widgets. Assume that the company was able to realize scale economies through increased buying power. Any benefit from these scale economies was offset by borrowing money at a much higher interest rate than existing long term debt. Using 5-Stage DuPont ROE formula, which of the following...
both ideas require a $12,500 investment today (T-o 6), while Investment B will grow to $25,000...
both ideas require a $12,500 investment today (T-o 6), while Investment B will grow to $25,000 at the ou are trying to compare two six year investment ideoas, Investment A will grow to $50,000 at the end of year 6 (T- end of year 6-6). Estimate the annualized return for each investment using the Rule of 72. Next, find the Compound Anmual Growth Rate (i.e. geometric average) for each investment, which we learned is more precise that the Rule of...
Assume you are a sell-side analyst and you cover the widget industry. In 2018, Big Widget...
Assume you are a sell-side analyst and you cover the widget industry. In 2018, Big Widget Company decided to double manufacturing capacity by issuing debt in order to capitalize on the growing demand for widgets. Assume that the company was able to realize scale economies through increased buying power. Any benefit from these scale economies was offset by borrowing money at a much higher interest rate than existing long term debt. Using 5-Stage DuPont ROE formula, which of the following...
Disaggregate Traditional DuPont ROE Graphical representations of the KLA-Tencor 2018 income statement and average balance sheet...
Disaggregate Traditional DuPont ROE Graphical representations of the KLA-Tencor 2018 income statement and average balance sheet numbers (2017-2018) follow (5 thousands). KLA.Tencor Average Balance Sheet 2017-2018 $1.473,464 52.6272355 KLA-Tencor Income Statement 2018 5802,265 $2,583,930 5653666 52.499,507 - 52.948.529 581,263 51.518,371 Operating at Noperating sites Norper Og expenses Netwo a. Compute return on equity (ROE). Round answer to two decimal places (ex: 0.12345 - 12.3596) ROE b. Apply the DuPont disaggregation into return on assets (ROA) and financial leverage. Round answers...
5. Assume you are decided to double for a sell-side analyst and you cover the widget...
5. Assume you are decided to double for a sell-side analyst and you cover the widget industry. In 2018, Big Widget Company e manufacturing capacity by issuing debt in order to capitalize on the growing deman widgets. Assume that the company was oble to realize scole economies through increased buying wer. Any benefit from these scale economies was offset by borrowing money at a much higher interes e hon existing long term debt. Using 5-Stage DuPont ROE formulo, which of...
Problem 4-6: DuPont and ROE A firm has a profit margin of 2% and an equity multiplier of 2.0. Its sales are $100 million, and it has total assets of $50 million. What is its ROE? Problem 4-13: Return on equity Midwest Packaging's ROE last year was only 3%, but its management has developed a new operating plant that calls for a total debt ratio of 60%, which will result in annual interest charges of $300,000. Management projects an EBIT...
the DuPont formula relates return on equit
The DuPont formula relates return on equity (= Net income, - Stockholders equity) to the company's net profit margin (= Net income Sales), asset turnover (= Sales + Total assets), and equity multiplier (= Total assets + Stockholders equity). This Company is in an industry where the average net profit margin is 6.19%, the debt-to-asset ratio (= Debt + Total assets) is 27.9%, and return on equity is 20.22%. Find below the Company's...
No need for explanation
You are trying to compare two six year investment ideas; both ideas require a $12,500 investment today (T-0). Investment A will grow to $50,000 at the end of year 6 (T-ó), while Investment B will grow to $25,000 at the end of year 6 (T=6). Estimate the annualized return for each investment using the Rule of 72, Next, find the Compound Annual Growth Rate (i.e. geometric average) for each investment, which we learned is more precise...
MUST SHOW ALL WORK The DuPont formula relates return on equity (Net income + Stockholders equity) to the company's net profit margin- Net income sales asset turnover (SalesTotal assets and equity multiplier (Total assets Stockholders equity). This Company is in an industry where the average net profit margin is 6.19%, the debt-to-asset ratio (Debt. Total assets) is 27.9%, and return on equity is 20.22% Find below the Company's financial statements for year 2525 Balance Sheet, 12/31/2525 Income, 1/1 - 12/31/2525...
both ideas require a $12,500 investment today (T-o 6), while Investment B will grow to $25,000 at the ou are trying to compare two six year investment ideoas, Investment A will grow to $50,000 at the end of year 6 (T- end of year 6-6). Estimate the annualized return for each investment using the Rule of 72. Next, find the Compound Anmual Growth Rate (i.e. geometric average) for each investment, which we learned is more precise that the Rule of...
Disaggregate Traditional DuPont ROE Graphical representations of the KLA-Tencor 2018 income statement and average balance sheet numbers (2017-2018) follow (5 thousands). KLA.Tencor Average Balance Sheet 2017-2018 $1.473,464 52.6272355 KLA-Tencor Income Statement 2018 5802,265 $2,583,930 5653666 52.499,507 - 52.948.529 581,263 51.518,371 Operating at Noperating sites Norper Og expenses Netwo a. Compute return on equity (ROE). Round answer to two decimal places (ex: 0.12345 - 12.3596) ROE b. Apply the DuPont disaggregation into return on assets (ROA) and financial leverage. Round answers...
5. Assume you are decided to double for a sell-side analyst and you cover the widget industry. In 2018, Big Widget Company e manufacturing capacity by issuing debt in order to capitalize on the growing deman widgets. Assume that the company was oble to realize scole economies through increased buying wer. Any benefit from these scale economies was offset by borrowing money at a much higher interes e hon existing long term debt. Using 5-Stage DuPont ROE formulo, which of...
Most questions answered within 3 hours.
-
A speeding car is traveling along a straight road with a
constant speed of 100 km/hour....
asked 41 seconds ago -
When 60.1 gg of calcium is reacted with nitrogen gas, 31.7 gg of
calcium nitride is...
asked 5 minutes ago -
The random variable X is exponentially distributed, where X
represents the time it takes for a...
asked 20 minutes ago -
a) Write a verilog module for 1:4 Demultiplexer using verilog
primitives.
b) Design 1-to-4 DEMUX using...
asked 15 minutes ago -
MATLAB
write a MATLAB function (1) output a third-order polynomial
function with the coefficients as the...
asked 27 minutes ago -
A z-score
communicates a raw score’s "relative standing"
under the normal curve in relation to:
asked 36 minutes ago -
An object is vibrating on a spring with the following equation
of motion:
?=(30 ??)cos((2?)/(160)?)
a)...
asked 35 minutes ago -
Vulcan Flyovers offers scenic overflights of Mount St. Helens,
the volcano in Washington State that explosively...
asked 38 minutes ago -
If organizations do not adapt fast enough and move incrementally
from the twentieth-century model to the...
asked 38 minutes ago -
A helium balloon with 2.5L of gas has a gauge pressure of 10,000
Pa. The balloon...
asked 43 minutes ago -
What is responsible for Jupiter's enormous magnetic field?
asked 58 minutes ago -
At the end of the year, a company offered to buy 5,000 units of
a product...
asked 59 minutes ago