Exhibit 14.5
Use the Information Below for the Following Problem(S)
$$\begin{array} { l c c }
& \text { Wal-Elue } & \text { Industry } \
\text { DPS } & 1.00 & 1.50 \
\text { Total As5et Tunover } & 3.20 & 2.50 \
\text { Net Profit Marpin } & 3.50 \% & 3.00 \% \
\text { EpS } & 4.00 & 3.00 \
\text { Total As5ets/Equity } & 3.00 & 4.00
\end{array}$$
-Refer to Exhibit 14.5.What are the ROE's for Wal-Blue and its industry?
A) 24.3% and 27.0%
B) 29.7% and 27.0%
C) 29.7% and 30.0%
D) 33.6% and 30.0%
E) 34.5% and 31.5%

Question

Exhibit 14.5
Use the Information Below for the Following Problem(S)
 $$\begin{array} { l c c } 
& \text { Wal-Elue } & \text { Industry } \
 \text { DPS } & 1.00 & 1.50 \
\text { Total As5et Tunover } & 3.20 & 2.50 \
\text { Net Profit Marpin } & 3.50 \% & 3.00 \% \
\text { EpS } & 4.00 & 3.00 \
\text { Total As5ets/Equity } & 3.00 & 4.00
\end{array}$$
-Refer to Exhibit 14.5.What are the ROE's for Wal-Blue and its industry?
A) 24.3% and 27.0%
B) 29.7% and 27.0%
C) 29.7% and 30.0%
D) 33.6% and 30.0%
E) 34.5% and 31.5%

Quizplus · Accepted Answer

ROE = Total asset turnover × Net profit margin× Total assets/equity
ROE (Wal-Blue)= 3.20 × .035 × 3.00 = .336 or 33.6%
ROE (Industry)= 2.50 × .03 × 4.00 = .300 or 30.0%

Exhibit 14 -Refer to Exhibit 14