WebSep 12, 2024 · Basic Earning Power Ratio = (400,000 / 3,500,000) * 100 = 11.43% Interpretation As said above, the higher the basic earning power ratio, the better it is. It simply shows the company’s efficiency in using its … WebThe basic earnings power ratio is a profitability metric that measures how efficiently a company is allocating its resources (i.e. asset base) to generate operating income. …

Profitability Ratios: Basic Earning Power (BEP) Ratio Saylor …

WebThe Basic Earning Power ratio (BEP) is Earnings Before Interest and Taxes (EBIT) divided by Total Assets. LEARNING OBJECTIVE Calculate a company's Basic Earning Power ratio KEY POINTS The higher the BEP ratio, the more effective a company is at generating income from its assets. Weba. Company A has a higher total assets turnover. b. Company A has a higher return on equity. c. Company A has a higher basic earning … greenville to rock hill sc

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WebPlease calculate Basic Power Earning Ratio. Basic Power Earning = Earning Before Interest and Tax / total asset EBIT = $ 500,000 – 100,000 – 50,000 = 350,000 Total Asset = $ 5,000,000 BPE = 350,000 / 5,000,000 = 7% It means that ABC has the basic power of earning 7% of the total asset. WebInterest expense $30,000. Earnings before taxes $770,000. Income taxes $308,000. Net income $462,000. Basic Earning Power ratio = EBIT/Total Assets =$800,000/$2,110,000 = 37%. Question 2. Iberian Ham Inc. financial statements are presented in the table below. Based on the information in the table, calculate Return on Assets. WebInvestors and analysts calculate earning power to determine whether a company is worth investing in. Earning power refers to either an organization’s or person’s ability to generate earnings in return for … greenville tours tickets