I was trying to rule these statements out 1 by 1...
Statement A - I was able to rule out because you use DDM to get "g" and "r". First you calculate "g" as RR*ROE=15.82% then you have to calculate "r" (this is dirty IMHO)... and you get r = .171
ROE = ROA * Leverage so Leverage = ROE/ROA. SMGI leverage is 1.73 industry avg is 1.454 so statement 1 is incorrect.
Statement B - I couldn't figure out.
Statement C - I calculated and got the PVGO as 19.17 and then as a percentage of the total estimated future price 19.17 / 35.78 = .535
Through process of elimination I was able to answer correctly, but I'm confused b/c I've never seen Asset turnover = ROA / NPM. Can anyone explain?作者: Swanand 时间: 2011-7-13 13:49
Edited 1 time(s). Last edit at Sunday, May 29, 2011 at 12:47AM by mbolzicco.作者: liquidity 时间: 2011-7-13 13:49
Just write out what each three is and its a simple manipulation.
Sales over assets equals ( NI over assets ) divided by (NI over Sales)
Formula gets solved to equal asset turnover on both sides作者: llxx 时间: 2011-7-13 13:49
PC79 you just stated the formula, I knew that formula when I looked at the answer key. I was asking for an explanation why ROA or (NPM*Asset Turnover) / NPM = Asset Turnover.
I can make sense with [ROE / NPM] / Leverage = Asset Turnover
ROE = NPM * ASSET TURNOVER * LEVERAGE so just divide ROE by Leverage, then by NPM u get Asset Turnover.
Perfect.作者: Analyze_This 时间: 2011-7-13 13:49
Oo, you need ROE.. I should have read the questuon, sorry about that
Nice call though on this question,never actually solved part b
