Last year, Mason Inc. had a total assets turnover of 1.35 and an equity multiplier of 1.50. Its sales were $185,000, and its net income was $10,549. The CFO believes that the company could have operated more efficiently, lowered its costs, and increased its net income by $5,250 without changing its sales, assets, or capital structure. Had it cut costs and increased its net income in this amount, by how much would the ROE have changed? ROE before cost savings: ___________%.? ROE after cost savings: ___________ %.? Improvement in ROE: ____________%?
Last year, Mason Inc. had a total assets turnover of 1.35 and an equity multiplier of 1.50. Its sales were $185,000, and its net income was $10,549. The CFO believes that the company could have operated more efficiently, lowered its costs, and increased its net income by $5,250 without changing its sales, assets, or capital structure. Had it cut costs and increased its net income in this amount, by how much would the ROE have changed? ROE before cost savings: ___________%.? ROE after cost savings: ___________ %.? Improvement in ROE: ____________%?
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, Mason Inc. had a total assets turnover of 1.35 and an equity multiplier of 1.50. Its sales were $185,000, and its net income was $10,549. The CFO believes that the company could have operated more efficiently, lowered its costs, and increased its net income by $5,250 without changing its sales, assets, or capital structure. Had it cut costs and increased its net income in this amount, by how much would the
ROE before cost savings: ___________%.?
ROE after cost savings: ___________ %.?
Improvement in ROE: ____________%?
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