Question

X-1 Corp's total assets at the end of last year were $395,000 and its EBIT was $52,500. What was its basic earning power (BEP) ratio?

Answer 1

Answer:

X-1 Corp Basic Earning Power ratio is 13.29%

Explanation:

Formula

Basic Earning Power  = Earnings Before Interest and Taxes  (EBIT ) / Total Assets

Therefore the Basic Earning Power ratio for X-1 Corp is:

$52500/$395,000 = 13.29%