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Debt-equity ratio of 0.75

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(1) Brooks Company has a debt-equity ratio of 0.75. Return on assets is 10.4 percent, and total equity is \$900,00. What is the equity multiplier? Return on equity? Net income?

(2) If the SGS Corp. has a 13 percent ROE and a 25 percent payout ratio, what is its sustainable growth rate?

(3) Conrad Co. had \$285,000 in taxable income. Using the rates from the attached (see attached table) :CORPORATE TAX RATES", calculate the company's income taxes. What is the average tax rate? what is the marginal tax rate?

(4) Brees, Inc., has current assets of \$7,500, net fixed assets of \$28,900, current liabilities of \$5,900, and long-term debt of \$18,700. What is the value of the shareholders' equity account for this firm? How much is net working capital?

(5) Williams, Inc., has sales of \$25,300, costs of \$9,100, depreciation expense of \$950. If the tax rate is 40 percent, what is the operating cashflow, or OCF?

(6) Tyler, Inc., has sales of \$753,000, costs of \$308,000, depreciation expenses of \$46,000, interest expense of \$21,500, and a tax rate of 35percent. What is the net income for the firm? Suppose the company paid out \$67,000 in cash dividends. What is the addition to retained earnings?

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Solution discusses the debt-equity ratio of 0.75

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(1) Brooks Company has a debt-equity ratio of 0.75. Return on assets is 10.4 percent, and total equity is \$900,00. What is the equity multiplier? Return on equity? Net income?
Equity Multiplier= Total Assets/Total equity
=1575000/900000
=1.75 times
Note:
Total Equity=\$900000,
Debt=Debt Equity ratio * Equity
=.75*900000
=\$675000
Total Assets= Debt + Equity
=900000+675000
=\$1575000
Return on Assets= Net Profit/Assets
Net profit= Return on Assets*Assets
=10.4%*1575000
=\$163800
Return on Equity= Net profit/Equity
=163800/900000
=18.2%
Net Income= \$163800

http://www.investopedia.com/terms/e/equitymultiplier.asp#axzz1rzb8sEvL

(2) If the SGS Corp. has a 13 percent ROE and a 25 percent payout ratio, what is its sustainable growth rate? ...

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