Question

O A firms times intrest earned is 4.5X the firms EBIT is 1,479,000. if the tax rate is 40% determine the net income. 32 A firms debt ratio is 45%. The firm had anet profit margin of 6% and turned over total assets 13.2 times. what return on equity lis implied by the Dupont breakdown!

Answer 1

Answer of Part 1:

Times Interest Earned = EBIT / Interest Expense
4.5 = $1,479,000 / Interest Expense
Interest Expense = $1,479,000 / 4.5
Interest Expense = $328,666.67

EBT = EBIT – Interest Expense
EBT = $1,479,000 - $328,666.67
EBT = $1,150,333.33

Net Income = EBT – EBT * Tax Rate
Net Income = $1,150,333.33 - $1,150,333.33 * 40%
Net Income = $1,150,333.33 - $460,133.33
Net Income = $690,200