2. Compute (a) return on equity (ROE), (b) market-to- book (M/B) ratio, and (c)
ID: 2780933 • Letter: 2
Question
2. Compute (a) return on equity (ROE), (b) market-to- book (M/B) ratio, and (c) enterprise value based on the following information: net profit margin = 4%, asset turnover = 1.5, debt = $60 million (assuming that the book value and market value of debt are the same), book value of assets = $100 million, market capitalization = $80 million, cash = $20 million. 2. Compute (a) return on equity (ROE), (b) market-to- book (M/B) ratio, and (c) enterprise value based on the following information: net profit margin = 4%, asset turnover = 1.5, debt = $60 million (assuming that the book value and market value of debt are the same), book value of assets = $100 million, market capitalization = $80 million, cash = $20 million. 2. Compute (a) return on equity (ROE), (b) market-to- book (M/B) ratio, and (c) enterprise value based on the following information: net profit margin = 4%, asset turnover = 1.5, debt = $60 million (assuming that the book value and market value of debt are the same), book value of assets = $100 million, market capitalization = $80 million, cash = $20 million.Explanation / Answer
Net Profit 4% Asset Turnover Ratio 1.5 Debt 60 Cash 20 Book Value of asset 100 Capitalization 80 Sales =1.5*book value of Asset 150 Net Income 4% of Sales 6 Equity =Total Asset-Debt 40 Return On Equity =Netincome/Equity 15% Market to Book Ratio =Capitalization/Equity 2.0 Times Enterprise value=debt+Capitalization-Cash 120
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.