Consider a retail firm with a net profit margin of 3.36%​, a total asset turnover of 1.88​, total assets of $45.5 million, and a book value of equity of $17.6 million. a. What is the​ firm's current​ ROE? b. If the firm increased its net profit margin to 4.27%​, what would be its​ ROE? c.​ If, in​ addition, the firm increased its revenues by 18% (maintaining this higher profit margin and without changing its assets or​ liabilities), what would be its​ ROE?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Consider a retail firm with a net profit margin of 3.36%​, a total asset turnover of 1.88​, total assets of $45.5 million, and a book value of equity of $17.6 million.
a. What is the​ firm's current​ ROE?
b. If the firm increased its net profit margin to 4.27%​, what would be its​ ROE?
c.​ If, in​ addition, the firm increased its revenues by 18% (maintaining this higher profit margin and without changing its assets or​ liabilities), what would be its​ ROE?
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