a. What is its return on stockholders' equity? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Return on stockholders' equity % b. If the asset base remains the same as computed in part a, but total asset turnover goes up to 3.00, what will be the new return on stockholders' equity? Assume that the profit margin stays the same as do current and long-term liabilities. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) New return on stockholders' equity %
a. What is its return on stockholders' equity? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Return on stockholders' equity % b. If the asset base remains the same as computed in part a, but total asset turnover goes up to 3.00, what will be the new return on stockholders' equity? Assume that the profit margin stays the same as do current and long-term liabilities. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) New return on stockholders' equity %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Complete a and b thank you
Transcribed Image Text:Jerry Rice and Grain Stores has $4,040,000 in yearly sales. The firm earns 4 percent on each dollar of sales and turns over its
assets 2 times per year. It has $102,000 in current liabilities and $381,000 in long-term liabilities.
a. What is its return on stockholders' equity? (Do not round intermediate calculations. Input your answer as a percent rounded
to 2 decimal places.)
Return on stockholders' aquity
%
b. If the asset base remains the same as computed in part a, but total asset turnover goes up to 3.00, what will be the new return
on stockholders' equity? Assume that the profit margin stays the same as do current and long-term liabilities. (Do not round
intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
New return on stockholders' equity
%
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