Use the following information for the next 2 questions: Holden Waters Products has $55 million of sales and $13…

Use the following information for the next 2 questions: Holden Waters Products has $55 million of sales and $13…

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Use the following information for the next 2 questions: Holden Waters Products has $55 million of sales and $13…
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Use the following information for the next 2 questions:
Holden Waters Products has $55 million of sales and $13 million of net income. Its total assets are $200
million. Assume Accounts Payable is $12 million, Accruals is $5 million, and Notes Payable is 56 million.
The firm’s capital structure consists of 24% debt and 76% common.equity. The firm’s interest expense is
$2.88 million and its tax rate is 21%. TAT = ssmil/z001
275
PM=BED/55 =.23636
What is the firm’s ROE?
70 What is firm’s ROIC

Expert Answer:

Answer rating: 100% (QA)

To calculate the firm s Return on Equity ROE we use the formula ROE Net Income Average Shareholders
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