Calculate its basic earning power and return on equity

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Broward Manufacturing recently reported the following information:

Net income                        $435,000

ROA                                  10%

Interest expense                $130,500

Accounts payable and accruals $1,000,000

Broward's tax rate is 30%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, while 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Round your answers to two decimal places.

Reference no: EM131959492

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