Basic earning power ratio
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Basic earning power ratio (alternatively known as BEP ratio) is the ration that is calculated by dividing earnings before interest and taxes by total assets. This ratio shows the raw earning power of the firm's assets before the influence of taxes and leverage.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Basic earning power ratio (BEP ratio). Calculated by dividing earnings before interest and taxes by total assets. This ratio shows the raw earning power of the firm's assets before the influence of taxes and leverage.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
