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Debt Ratio and Du Pont analysis

I need help with the following questions

2- Debt ratio Bartley Barstools has an equity multiplier of 2.4, and its assets are financed with some combination of long- term debt and common equity. What is its debt ratio?

3-Du Pont analysis Doublewide Dealers has an ROA of 10 percent, a 2 percent profit margin, and an ROE of 15 percent. What is its total assets turnover? What is its equity multiplier?

5-Price/earnings ratio A company has an EPS of $ 2.00, a cash flow per share of $ 3.00, and a price/ cash flow ratio of 8.0 . What is its P/ E ratio?

6-Du Pont and ROE A firm has a profit margin of 2 percent and an equity multiplier of 2.0. Its sales are $ 100 million and it has total assets of $ 50 million. What is its ROE?

Solution Preview

2- Debt ratio Bartley Barstools has an equity multiplier of 2.4, and its assets are financed with some combination of long- term debt and common equity. What is its debt ratio?

Equity Multiplier = Total Assets/Shareholders' Equity

Assets = Debt + Equity

Equity Multiplier = (Debt + Equity)/Equity
2.4Equity = Debt + Equity
Debt = 1.4Equity

Debt ratio = Total Debt/Total Assets
= ...

Solution Summary

This solution is comprised of a detailed explanation to compute the debt ratio, equity multiplier, P/E ratio, and ROE.

$2.19