Having a solid structure or surface. Does this help?
Answer: The advantage of the basic earning power ratio (BEP) over the return on total assets for judging a company's operating efficiency is that the BEP does not reflect the effects of debt and taxes
Explanation:
a. This is correct.
The advantage of basic earning power ratio over the return on the total assets for judging a firm's operating efficiency is that the basic earning power does not reflect effects of debt and taxes.
b. This is incorrect.
Only the price/earnings ratio of the company will tell us nothing about a company. When we compare the price/earnings of a company with the peers, we would know whether such company is under valued, or over valued or maybe fairly valued.
c. This is incorrect.
The total assets is made up of total liabilities plus the shareholders equity, when other things are held constant, less debt simply means less liabilities. To balance both sides, the total assets should reduce as the shareholder's equity is constant. When total assets decreases, the return on the assets will increase.
d. This is incorrect.
We can reach a conclusion on which firm is better managed based on the facts given. The debt ratio is the total liabilities divided by total assets, and a lower ratio is known to be good in comparison to a higher ratio. Similarly, the profit margin is the profit divided by the sales, and low profit margin shows high expenses and also a need for the management to decrease the expense.
Answer:
Explanation:
a) WACC of computer sales division:
Cost of equity = 4.3%+1.18×5.9%
=11.262%
WACC =(65300/(65300+705))×11.262%+(705/(65300+705))×6.2%×(1-35%)
=0.99*11.262% + 0.01*6.2%*0.65 = 11.15%+0.0403% = 11.2%
b. 12.5% = 43%×11.2%+57%×WACC (software div)
12.5% = 481.6% + 57%WACC
57%WACC = 469.1%
WACC (software division) = 8.23%
There is several so I’d go with 3
Hope this helps! :)
