Broward Manufacturing recently reported the following information:

Net income.....................................$615,000
ROA..........................................................10%
Interest expense............................$202,950
Accounts payable and accruals...$950,000

Broward’s tax rate is 40%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, and 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC).

Answer rating: 100% (QA)

Basic Earning Power BEP Ratio Earnings Before TaxEBT Net Income 1 Tax Rate 615000 1 04 615000 06 10... View the full answer