Hi Dear Professor
Would I like to know the company’s ROE & ROIC ?
My
company’s net income is $25,000, its interest expense is $5,000, and its tax rate is 40%. Its notes payable equals $25,000, long-term debt equals $75,000, and common equity equals $250,000. The company finances only with debt and common equity, so it has no preferred stock. What are the company’s ROE and ROIC?
Briefly comment on the usefulness of these two ratios for measuring the company’s financial performance.
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