Solutions to Chapter 1

To calculate return on equity, we need to realize that the total asset turnover is the inverse of the capital intensity ratio and the equity multiplier is one plus the debt-equity ratio. So, the return on equity is: ROE = (Profit margin)(Total asset turnover)(Equity multiplier) ROE = (.087)(1/.60)(1 + .40) ROE = .2030 or 20.30%. Next we need the plowback ratio. The payout ratio is one minus ... ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download