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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.




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