Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
ROE
Debt/Equity ratio
Tax rate
Interest rate on debt
Solution
A firm has an ROE of 3%, a debt/equity ratio of .5, a tax rate of
35%, and pays an interest rate of 6% on its debt. What is its
operating ROA?
Tax burden
Leverage ratio
Interest burden
Return on sales
Sales / $1 assets
Solution
A firm has a tax burden ratio of .75, a leverage ratio of 1.25, an
interest burden of .6, and a return on sales of 10%. The firm
generates $2.40 in sales per dollar of assets. What is the firm’s
ROE?
Preferred stock
Number of shares
Dividend rate
Par value
Liquidation value
Common stock
Number of shares
Par value
Retained earnings (start)
Net income
Solution
An analyst gathers the following information about Meyer, Inc.:
• Meyer has 1,000 shares of 8% cumulative preferred stock outstanding, with a
par value of $100 and liquidation value of $110.
• Meyer has 20,000 shares of common stock outstanding, with a par value of
$20.
• Meyer had retained earnings at the beginning of the year of $5,000,000.
• Net income for the year was $70,000.
• This year, for the first time in its history, Meyer paid no dividends on preferred
or common stock.
What is the book value per share of Meyer’s common stock?
