Question

Baker Industries’ net income is $23,000, its interest expense is $6,000, and its tax rate is 35%. Its notes payable equals $23,000, long-term debt equals $80,000, and common equity equals $255,000. The firm finances with only debt and common equity, so it has no preferred stock. What are the firm’s ROE and ROIC? Round your answers to two decimal places. Do not round intermediate calculations.

ROE | % |

ROIC | % |

Thomson Trucking has $15 billion in assets, and its tax rate is 30%. Its basic earning power (BEP) ratio is 11%, and its return on assets (ROA) is 7%. What is its times-interest-earned (TIE) ratio? Round your answer to two decimal places.

Answer #1

**Answer to Question
1.**

Return on Equity (ROE) = Net Income / Common Equity * 100

Return on Equity (ROE) = $23,000 / $255,000 * 100

**Return on Equity (ROE) = 9.02%**

Return on Invested Capital (ROIC) = EBIT (1 – Tax Rate) / Total
Invested Capital * 100

Total Invested Capital = Notes Payable + Long Term Debt + Common
Equity

Total Invested Capital = $23,000 + $80,000 + $255,000

Total Invested Capital = $358,000

Net Income = EBT * (1 – Tax Rate)

$23,000 = EBT * (1 – 0.35)

EBT = $35,384.62

EBT = EBIT – Interest Expense

$35,384.62 = EBIT - $6,000

EBIT = $41,384.62

Return on Invested Capital (ROIC) = $41,384.62 * (1 – 0.35) /
$358,000 * 100

Return on Invested Capital (ROIC) = $26,900.03 / $358,000 *
100

**Return on Invested Capital (ROIC) = 7.51%**

Baker Industries’ net income is $23,000, its interest expense is
$6,000, and its tax rate is 40%. Its notes payable equals $25,000,
long-term debt equals $70,000, and common equity equals $240,000.
The firm finances with only debt and common equity, so it has no
preferred stock. What are the firm’s ROE and ROIC? Do not round
intermediate calculations. Round your answers to two decimal
places.

Baker Industries’ net income is $24,000, its interest expense is
$6,000, and its tax rate is 40%. Its notes payable equals $27,000,
long-term debt equals $80,000, and common equity equals $245,000.
The firm finances with only debt and common equity, so it has no
preferred stock. What are the firm’s ROE and ROIC? Do not round
intermediate calculations. Round your answers to two decimal
places.

Baker Industries’ net income is $27,000, its interest expense is
$6,000, and its tax rate is 40%. Its notes payable equals $24,000,
long-term debt equals $75,000, and common equity equals $260,000.
The firm finances with only debt and common equity, so it has no
preferred stock.
What are the firm’s ROE and ROIC?
Do not round intermediate calculations. Round your answers to
two decimal places.

Baker Industries’ net income is $25,000, its interest expense is
$5,000, and its tax rate is 45%. Its notes payable equals $23,000,
long-term debt equals $70,000, and common equity equals $250,000.
The firm finances with only debt and common equity, so it has no
preferred stock. What are the firm’s ROE and ROIC? Do not round
intermediate calculations. Round your answers to two decimal
places.

Baker Industries’ net income is $21,000, its interest expense is
$5,000, and its tax rate is 25%. Its notes payable equals $24,000,
long-term debt equals $80,000, and common equity equals $260,000.
The firm finances with only debt and common equity, so it has no
preferred stock. What are the firm’s ROE and ROIC? Do not round
intermediate calculations. Round your answers to two decimal
places.
ROE: %
ROIC: %

Baker Industries’ net income is $24,000, its interest expense is
$4,000, and its tax rate is 35%. Its notes payable equals $25,000,
long-term debt equals $80,000, and common equity equals $250,000.
The firm finances with only debt and common equity, so it has no
preferred stock. What are the firm’s ROE and ROIC? Round your
answers to two decimal places. Do not round intermediate
calculations.
ROE %
ROIC %

Baker Industries’ net income is $27,000, its interest expense is
$5,000, and its tax rate is 35%. Its notes payable equals $27,000,
long-term debt equals $75,000, and common equity equals $250,000.
The firm finances with only debt and common equity, so it has no
preferred stock. What are the firm’s ROE and ROIC? Do not round
intermediate calculations. Round your answers to two decimal
places.

Baker Industries’ net income is $25,000, its interest expense is
$4,000, and its tax rate is 45%. Its notes payable equals $27,000,
long-term debt equals $75,000, and common equity equals $240,000.
The firm finances with only debt and common equity, so it has no
preferred stock. What are the firm’s ROE and ROIC? Round your
answers to two decimal places. Do not round intermediate
calculations.

Baker Industries’ net income is $24,000, its interest expense is
$5,000, and its tax rate is 45%. Its notes payable equals $25,000,
long-term debt equals $70,000, and common equity equals $240,000.
The firm finances with only debt and common equity, so it has no
preferred stock. What are the firm’s ROE and ROIC? Round your
answers to two decimal places. Do not round intermediate
calculations.

Baker Industries’ net income is $25,000, its interest expense is
$4,000, and its tax rate is 45%. Its notes payable equals $27,000,
long-term debt equals $70,000, and common equity equals $260,000.
The firm finances with only debt and common equity, so it has no
preferred stock. What are the firm’s ROE and ROIC? Do not round
intermediate calculations. Round your answers to two decimal
places.

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