Ratio Calculations
Graser Trucking has $21 billion in assets, and its tax rate is 40%. Its basic earning power (BEP) ratio is 17%, and its return on assets (ROA) is 7%. What is its times-interest-earned (TIE) ratio? Round your answer to two decimal places.
Tie and Roic Ratios
The H.R. Pickett Corp. has $500,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 10%. In addition, it has $700,000 of common stock on its balance sheet. It finances with only debt and common equity, so it has no preferred stock. Its annual sales are $3 million, its average tax rate is 35%, and its profit margin is 8%. What are its TIE ratio and its return on invested capital (ROIC)? Round your answers to two decimal places.
TIE x
ROIC %
Return on Equity
Midwest Packaging's ROE last year was only 3%; but its management has developed a new operating plan that calls for a debt-to-assets ratio of 55%, which will result in annual interest charges of $480,000. The firm has no plans to use preferred stock. Management projects an EBIT of $1,110,000 on sales of $15,000,000, and it expects to have a total assets turnover ratio of 2.6. Under these conditions, the tax rate will be 35%. If the changes are made, what will be the company's return on equity? Round your answer to two decimal places.
%