Financial Accounting Question please answer Last year, Horizon Enterprises had $250,000 of assets, $400,000 of sales,$25,000 of net income, and a debt-to-total-assets ratio of 40%. The newCFO believes a new marketing campaign will enable it to reduce costsand thus raise net income to $45,000. Assets, sales, and the debt ratiowould not be affected.By how much would the cost reduction improve the ROE (Return onEquity)?

Step 1: Definition of Return on Equity (ROE)Return on Equity (ROE) is a measure of financial…

Answered: Last year, Horizon Enterprises had…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 13P

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Rowe and Company has a debt ratio of 0.50, a total assets turnover of 0.25, and a profit margin of 10 percent. The president is unhappy with the current return on equity, and he thinks it could be doubled. This could be accomplished (1) by increasing the profit margin to 14 percent and (2) by increasing debt utilization. Total assets turnover will not change. What new debt ratio, along with the 14 percent profit margin, is required to double the return on equity?
Roland & Company has a new management team that has developed an operating plan to improveupon last year’s ROE. The new plan would place the debt ratio at 55 percent, which will result ininterest charges of $7,000 per year. EBIT is projected to be $25,000 on sales of $270,000, it expects tohave a total assets turnover ratio of 3.0, and the average tax rate will be 40 percent. What does Roland& Company expect its return on equity to be following the changes?
JunJun & Co. has debt ratio of 0.50, a total asset turnover of 0.25 and a profit margin of 10%. The president is unhappy with the current return on equity, and he thinks it could be doubled. This could be accomplished (1) by increasing the profit margin to 14% and (2) by increasing debt utilization. Total assets turnover will not change. What new debt ratio, along with the 14% profit margin, is required to double the return on equity? (SHOW SOLUTION) a. 0.75 b. 0.70 c. 0.65 d. 0.55
Lance Motors has current assets of $1.2 million. The company’s current ratio is 1.2, its quick ratio is 0.7, and its inventory turnover ratio is 4. The company would like to increase its inventory turnover ratio to the industry average, which is 5, without reducing its sales. Any reductions in inventory will be used to reduce the company’s current liabilities. What will be the company’s current ratio, assuming that it is successful in improving its inventory turnover ratio to 5?
Junjun Co. has debt ratio of .50 , total assets turnover of 0.25 , and a profit margin of 10%. The president is unhappy with the current return on equity , and he thinks it could be doubled . This could be accomplished (1) by increasing the profit margin to 14% and (2) by increasing debt utilization. Total assets turnover will not change. What new debt ratio along with the 14% profit margin is required to double the return on equity ? a. 0.75 b. 0.65 c. 0.70 d. 0.55
Dubs & Co. has a debt ratio of 0.50, a total assets turnover of 0.25, and a profit margin of 10%. The CEO is unhappy with the current return on equity, and he thinks it could be doubled. This could be accomplished by increasing the profit margin to 14% and increasing debt utilization. Total assets turnover will not change. What new debt ratio, along with the 14% profit margin, is required to double the return on equity?
ROE ? Accounting
What is the pro forma net income expected to be on these financial accounting question?
What will be its return on equity??
Suppose that in 2023, Global launched an aggressive marketing campaign that boosted 2023 sales further by 15.8%. However, their operating margin fell from 5.76% to 3.98%. Suppose that they had no other income, interest expenses were unchanged, and taxes were the same percentage of pretax income (26%) as in 2022. Global Corp. initially projected the 2023 income statement shown in the following table: a. What was Global's EBIT in 2023? b. What was Global's net income in 2023? c. If Global's P/E ratio (18.0) and number of shares outstanding (3.6 million) remained unchanged, what was Global's share price in 2023?
The ROE of the Midwest Corporation last year was only 3%. [Note: This information is irrelevant in this problem] This year, its management would like to have a 60% debt-to-assets ratio, which would result in the annual interest expense of $300,000. The company’s management projects the EBIT of $1,000,000 on the total Sales of $10,000,000. They expect to have the total asset turnover ratio of 2. Under these conditions, the corporate tax rate will be 34%. If the changes are made, calculate the firm’s return on equity in the current year.
Bartlett's Pears has a profit margin of 8.20 percent on sales of $24,300,000. If the firm has a debt of $10,400,000 and total assets of $21,000,000, what is the firm's ROA? Solve this problem

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