19. Firm X has a Return on Equity(ROE) equal to 15%, a total debt ratioequal to 0.6. If the firm has an fixed-asset turnover ratio of 0.54, what isits profit margin? *a) 7.4%b) 3.08%c) 9%d) 8.5%e) Cannot be determined

Ratio analysis of the financial statement helps in evaluating the performance of the company as…

Answered: 19. Firm X has a Return on Equity (ROE)…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The beta of Company’s X equity is equal to 1. Assuming that the company's debt is risk-free, that X's debt to equity ratio is equal to 1, and that there are no taxes, the beta of company X’s assets is 1 1/2 2 2/3
17. A firm currently has a cost of equity (i.e., a required return on its equity) of 15%. It has no debt outstanding, but bankers have offered to lend to it at an interest rate of 6%, as long as it maintains a debt - to - value ratio no greater than .3. What would the firm's new cost of equity be if it borrows up to this amount of debt, converting to a debt-to- value ratio of .3 ? A. 8.57% B. 16.80% C. 17.57% D. 17.70% Ε. 18.86% Answer: E. 18.86%
Assume the following ratios are constant: Total asset turnover Profit margin Equity multiplier Payout ratio 2.5 6.5% 1.6 20% What is the sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Sustainable growth rate %
Compute the unlevered market (asset) beta for Whirlpool. Current Levered Market Beta - Unlevered Market Beta x [1+(1-Income Tax Rate) x (Current Market Value of Debt/Current Market Value of Equity)] a b Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. 1.44 3.52 Total assets Interest-bearing debt Average pretax borrowing cost Common equity. C 2.27 Book value Market value Income tax rate Market equity beta Whirlpool $13,532 $ 2,597 6.1% $ 3,006 $ 2,959 35.0% 227
D All else being equal, which one of the following will decrease a firm's current ratio? Question 17 a decrease in the net fixed assets a decrease in depreciation O a decrease in accounts payable O a decrease in a counts receivables
Assume that Firms U and L are in the same risk class and that both have EBIT=$500,000. Firm U uses no debt financing, and its cost of equity is rsU=14%. Firm L has $1 million of debt outstanding at a cost of rd=8%. There are no taxes. Assume that the MM assumptions hold. Graph (a) the relationships between capital costs and leverage as measured by D/V and (b) the relationship between V and D. Now assume that Firms L and U are both subject to a 40% corporate tax rate. Using the data given in Part b, repeat the analysis called for in b(1) and b(2) using assumptions from the MM model with taxes.
4. According to the basic DuPont equation, a firm's ROE is the product of what other two ratios? a. net profit margin and the equity multiplier b. ROA and the equity multiplier C. net profit margin and return on equity d. net profit margin and total asset turnover
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The Ashwood Company has a long-term debt ratio of 0.50 and a current ratio of 1.60. Current liabilities are $970, sales are $5,175, profit margin is 9.80 percent, and ROE is 17.60 percent. What is the amount of the firm's net fixed assets? Hint: This is another complex problem that requires a number of steps. Remember that CA + NFA=TA. So, if you find CA and TA, then you can solve for NFA Helpful Equations: Long-term debt ratio - LTD/(LTD + TE) CR-CA/CL PM-NI / Sales ROE-NI/TE O $3,851.53 O $3,601.92 O $5,181.07 O $6.733.07 O $2.881.53
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fast QUESTION 9 A company has a Return on Equity of 0.2, a Profit Margin of 0.12 and Total Asset Turnover of 0.48. Using this information calculate the Equity Multiplier?
Q. 4 A firm wishes to maintain an internal growth rate of 6.75% and a dividend payout ratio of 31%. The current profit margin is 5.3% and the frim uses no external financing sources. What must total asset turnover be? (DO NOT round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16) Total asset turnover ? times

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19. Firm X has a Return on Equity (ROE) equal to 15%, a total debt ratic equal to 0.6. If the firm has an fixed- asset turnover ratio of 0.54, what is its profit margin? * a) 7.4% ОБ) 3.08% с) 9% O d) 8.5% O e) Cannot be determined