Question

in sales - $435,000. Ite operating costs - $362.500It interest - $12.500. Calculate for times interest-earned TIE). hit. DIT - ales-operating costa) BIT = 52,500. Calculate for basic i m 'a total assets - $405,000. aming power (BEP). b. 12.01 1.Jo. im am's stock price is $23.50. Its earnings per share (EPA) - Calculate for P/E ratio. a. 18.17 b. 18.00 c. 18.70 Fin a sseta - $375,000. It has no debt. Sales - $595.000. Pirm M want to improve ROE up to 156. When ROE - 151, calculate for profit margin. hintl Here total asset - total equity since debt-0. Need NI to figure out profit margin) b. 9.931 c. 9.626 Pirm M a nset - $ 305,000. Sales - $403,000. Net income $28.250. Debt/total assets - 391. This company plans to reduce total assets to $252,500 and hold everything else fixed (same sales, same net incomes and the same debt/asset ratio which is 390). Calculate the new ROE Chint ROE - NI/TE and TETA-TD; TD-?) a. 19.856 b. 20.151 c. 18.341 Assume that the one year Treasury bill yield = 71. Future inflation rate - 3.20$ per year. Approximately, how much is the real risk free rate of return, r? a. 3.80 b. 3.981 c. 4.216 11. Assume that the real risk free rate 3.501 and inflation - 2.201. What is the rate of a one year Treasury security? a. 6.046

Answer 1

5)
TIE Ratio:
= EBIT/Interest expense
= ($435,000-$362,500)/$12,500
= 5.80
Hence, correct option is a. 5.80
6)
BEP:
=EBIT /Total assets
= $52,500/$405,000
= 12.96%
Hence, correct option is c. 12.96%

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