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rosemary2011

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tT
发表于 2011-7-13 15:24 | 只看该作者

Return on equity for the company

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
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eagles_dare13

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2#
发表于 2011-7-13 15:24 | 只看该作者
What do you mean 'equity 1.8', is that a dollar figure?

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cchang

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3#
发表于 2011-7-13 15:24 | 只看该作者
Whats the question? solve what?

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manasib

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4#
发表于 2011-7-13 15:24 | 只看该作者
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?

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Kiakaha

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5#
发表于 2011-7-13 15:24 | 只看该作者
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

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FVPV

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6#
发表于 2011-7-13 15:24 | 只看该作者
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.

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ogoluwa

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7#
发表于 2011-7-13 15:24 | 只看该作者
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?

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rgonzalez

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8#
发表于 2011-7-13 15:24 | 只看该作者
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.

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Micholien

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9#
发表于 2011-7-13 15:24 | 只看该作者
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!

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dontknow1987

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10#
发表于 2011-7-13 15:24 | 只看该作者
I think the problem is missing at least one input parameter.

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