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If a company's return on equity is 10 percent its profit margin is 5 percent and its asset turnover is 1.57 what is it's equity multiplier?
EQUITY MULTIPLIER=Total Assets / Total Stockholders' Equity
What is ROE divided by ROA?
ROE divided by ROA isi the equity multiplier, which is also equal to total assets divided by total equity.
How do you find a multiplier?
For a change of p percent, the multiplier is (1+p/100).
The multiplier of a variable?
The term coefficient is often used to mean multiplier of a variable. So if we have 3x+3, then 3 is the coefficient of x.
What is Financial leverage multiplier?
The leverage multiplier equals to total asset dividing by shareholders' equity. The high leverage multiplier indicates that the firms decide to overcome the high levels of borrowing or debt on which it must pay interest. The higher ratio means higher liability than its shareholders' equity. Essentially, the ratio is mainly used to help firms making decision about how to raise funds by undertaking debts. A company will only undertake significant amounts of debt when it believes that return on assets (ROA) will be higher than the interest on the loan.
What is the equity multiplier if a company has a debt equity ratio of 1.40 return assets is 8.7 persent and total equty is 520000?
The equity multiplier = debt to equity +1. Therefore, if the debt to equity ratio is 1.40, the equity multiplier is 2.40.
How do you solve for debt to equity ratio with an equity multiplier of 2.47?
Equity Multiplier = 2.4 Therefore Equity Ratio = 1/EM Equity Ratio = 1/2.4 = 0.42 MEMORIZE this formula: Debt Ratio + Equity Ratio = 1 Therefor Debt Ratio = 1 - Equity Ratio = 1 - 0.42 = 0.58 or 58%
How do you solve for debt ratio with an equity multiplier of 24 and its assets are financed with some combination of long term ad common equity?
Equity multiplier = 24 Equity ratio = 1/3.0 = 0.33 Debt ratio + Equity ratio = 1 ***THIS EQUATION IS THE KEY TO THE ANSWER*** By manipulating this formula you can find Debt ratio = 1 - Equity ration 1 - 0.33 = 0.67 or 67% Debt ratio = 67%
If a company's return on equity is 10 percent its profit margin is 5 percent and its asset turnover is 1.57 what is it's equity multiplier?
EQUITY MULTIPLIER=Total Assets / Total Stockholders' Equity
A company has an ROA of 10 percent a 2 percent profit margin and a return on equity equal to 15 percent. What is the companys total asset turnover and what is the firm's equity multiplier?
Given: ROA = 10%, Profit margin = 2%, ROE = 15% ROA = Profit margin x Asset Turnover Therefore, Asset Turnover = ROA / Profit margin = 10 / 2 = 5% ROE = Profit margin x Asset Turnover x Equity multiplier 15 = 2 x 5 x Equity Multiplier 15 / 10 = Equity Multiplier Equity Multiplier = 1.05
If a company has an equity multiplier of 2.4 what is its debt ratio?
1.4
If A firm that has an equity multiplier of 4.0 will have a debt ratio of?
0.75
How do you solve for equity multiplier with ROA 10 percent profit margin 2 percent and ROE 15 percent?
Equity Multiplier ROA*Equity Multiplier=ROE so, (10%)*(x)=(15%), therefore, Equity Multiplier=15%/10%= 1.5 times Total Asset Turnover Profit Margin*Total Asset Turnover = ROA, so (2%)*(x)=10%, therefore Total Asset Turnover=10%/2%= 5 times
If a firms ROA and ROE are equal it can be concluded?
Since ROE = ROA (Equity Multiplier) in order for ROE to equal ROA the equity multiplier must be one. In other words, the total assets to total shareholders' equity ratio must be one.
What is a leverage multiplier ratio?
the return on equity divided by the return on assets
If a firm has an equity multiplier of 2?
an equity multiplier of 2 means that the firm finances it asset with 50% of debt instruments. thus, for every $ of investments in assets, the firm matches it with an equivalent composition of debt.
Doublewide Dealers has an ROA of 10 percent a 2 percent profit margin?
Given: ROA = 10%, Profit margin = 2%, ROE = 15% ROA = Profit margin x Asset Turnover Therefore, Asset Turnover = ROA / Profit margin = 10 / 2 = 5% ROE = Profit margin x Asset Turnover x Equity multiplier 15 = 2 x 5 x Equity Multiplier 15 / 10 = Equity Multiplier Equity Multiplier = 1.05
