4-7 4-19

TATO= sales / TA
3.2= 6000000 / TA
TA= 1875000
Equity= 1875000 * .5= 937500
ROE= (NI/S) TATO (TA/E)
.12= (NI / 6000000) 3.2 (1875000/937500)
.12= (NI / 6000000) * 6.4
NI= $112,500
4-21
4-9
Book value = shareholder equity / share outstanding =
3.75 billion / 50 million = 75Market price = M/B ratio x
book value = 1.9 x 75 = 143.5

4-11
BEP= EBIT / TA
.15= EBIT / 12000000000
EBIT= 1800000000
ROA=NI / TA
.05=NI / 12000000000
NI= 600000000
EBT= NI / (1 - Tax Rate)
= 600000000 / (1 - .4)= 1000000000
INT= EBIT- EBT
= 1800000000-1000000000= 800000000
TIE= EBIT / INT
= 1800000000/800000000= 2.25x
4-23
4-13
Tax= (EBIT - I) * Tax Rate
= (1000000 - 300000) * .34= 238000
NI= EBIT - I - Taxes
= 1000000 - 300000 - 238000= 462000
EA= 1- DA
= 1- .6= .4
ROE= PM TATO Equity Multiplier
= (NI / Sales) TATO (TA / Equity)
= (462000/10000000) 2 (1 / EA)
= .0924 * (1 / EA)
=.0924 * (1 / .4)= 23.1%

4-15
4-17