Question

Chambliss Corp.'s total assets at the end of last year were $385,000 and its EBIT was 62,500. What was its basic earning power (BEP)?

Answer 1

Answer:

The answer is 16.23%

Explanation:

Basic Earning Power is a profitability ratio.

The purpose of this is to know how effectively a business is using its assets to generate income or sales

Basic Earning Power =

EBIT/Total asset

Total asset is $385,000

EBIT is $62,500

62,500/385,000

=0.16233

Express as a percentage =

16.23%