For the conditions given above, it can be concluded to state that the Basic Earning Power, or the BEP ratio of the company will be 11.41 percent when it has total assets of $460,000 and its EBIT amount to a total of $52,500. Therefore, the option E holds true.
The computation of the Basic Earning Power of the company can be done using the generalized formula and the information given above, as below,
Basic Earning Power = EBIT / Total Assets
Basic Earning Power = 52500 / 460000
Basic Earning Power = 0.1141
Therefore, the BEP ratio of the company will be 11.41 percent.
Learn more about the BEP ratio here:
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