标题: Return on equity for the company [打印本页] 作者: rosemary2011 时间: 2011-7-13 15:24 标题: Return on equity for the company
Dividend payout ratio 30.5%
Net profit margin 6%
total asset turnover 1.8
equity 1.8
Does anyone know a simple way to solve this
Thank you in advance
navin404作者: eagles_dare13 时间: 2011-7-13 15:24
What do you mean 'equity 1.8', is that a dollar figure?作者: cchang 时间: 2011-7-13 15:24
Whats the question? solve what?作者: manasib 时间: 2011-7-13 15:24
I think the answer is:
= Net profit margin*total asset turnover= NI/Sales*Sales/Asset=0.06*1.8=0.108...
Please someone correct if I'm wrong?作者: Kiakaha 时间: 2011-7-13 15:24
I think you are correct
It could be 10.8%
or
12.6%
You made it look very simple, but it's a confusing question作者: FVPV 时间: 2011-7-13 15:24
To answer the others questions, the question is . Return on equity for company "a" is-
Edited 1 time(s). Last edit at Tuesday, April 19, 2011 at 05:58AM by navin404.作者: ogoluwa 时间: 2011-7-13 15:24
I don't think Abokhaled's answer is right because it doesn't include the impact of leverage....having said that, I don't know how to get the right answer either.
ROE is net income / average total equity
you can also use dupont, which we seem to have 2 of the 3 parts of:
(net income/revenue) * (revenue/average assets) * (average assets/average equity)
lastly i guess you could derive from the growth rate used in gordon growth model
Growth rate = ROE * Retention Rate
therefore ROE = growth rate / retention rate
But -- I still can't see how to use any of these to get the answer. Anyone? 作者: rgonzalez 时间: 2011-7-13 15:24
I agree with you, need definitely need the multiplier to get ROE, and I had a similar thought about using the Gordon Growth Model too, but do not see enough information here to solve the problem with those two methods.作者: Micholien 时间: 2011-7-13 15:24
Alright, If Net profit margin is 6% this means NI must be $6 and sales is $100. Then ROE=NI/OE (Owners Equity)=$6/1.8=3.33%.
Again I'm assuming that since NPM=6%, then sales would be 100 and NI is 6.
Does that make sense!作者: dontknow1987 时间: 2011-7-13 15:24
I think the problem is missing at least one input parameter.