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10 June, 18:07

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?

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  1. 10 June, 19:01
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    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%
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