Last year, K9 WebbWear, Inc. reported an ROE of 22 percent. The firm’s debt ratio was 50 percent, sales were $24 million, and the capital intensity was 1.25 times. This year, K9 WebbWear plans to increase its debt ratio to 60 percent. The change will not affect sales or total assets, however, it will reduce the firm’s profit margin to 15 percent. Calculate the net income and profit margin for K9 WebbWear last year. (Enter your answer in millions of dollars rounded to 2 decimal places. Round your percentage answer to 2 decimal places.) Net Income (last year) = ________.__millions Profit margin (last year) = _______.__ % By how much will the change in K9 WebbWear’s debt ratio affect its ROE? ROE (this year) will = _________ _______ %
Last year, K9 WebbWear, Inc. reported an ROE of 22 percent. The firm’s debt ratio was 50 percent, sales were $24 million, and the capital intensity was 1.25 times. This year, K9 WebbWear plans to increase its debt ratio to 60 percent. The change will not affect sales or total assets, however, it will reduce the firm’s profit margin to 15 percent. Calculate the net income and profit margin for K9 WebbWear last year. (Enter your answer in millions of dollars rounded to 2 decimal places. Round your percentage answer to 2 decimal places.) Net Income (last year) = ________.__millions Profit margin (last year) = _______.__ % By how much will the change in K9 WebbWear’s debt ratio affect its ROE? ROE (this year) will = _________ _______ %
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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Last year, K9 WebbWear, Inc. reported an
- Calculate the net income and profit margin for K9 WebbWear last year. (Enter your answer in millions of dollars rounded to 2 decimal places. Round your percentage answer to 2 decimal places.)
- Net Income (last year) = ________.__millions
- Profit margin (last year) = _______.__ %
- By how much will the change in K9 WebbWear’s debt ratio affect its ROE?
- ROE (this year) will = _________ _______ %
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