Assume the following relationships for the Caulder Corp.: Sales/Total assets Return on assets (ROA) Return on equity (ROE) Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: Debt-to-capital ratio: % % 1.9x 8.0% 13.0%
Assume the following relationships for the Caulder Corp.: Sales/Total assets Return on assets (ROA) Return on equity (ROE) Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: Debt-to-capital ratio: % % 1.9x 8.0% 13.0%
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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Transcribed Image Text:Assume the following relationships for the Caulder Corp.:
Sales/Total assets
Return on assets (ROA)
Return on equity (ROE)
Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round
intermediate calculations. Round your answers to two decimal places.
Profit margin:
Debt-to-capital ratio:
%
%
1.9x
8.0%
13.0%
Expert Solution
Step 1: Profit margin
The overall indication of the yield percentage of the company from all the activities is denoted by the profit margin. The higher the ratio value, the higher the profitability of the company, which puts it in a favorable position.
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