1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
uysha [10]
3 years ago
10

Keller Cosmetics maintains an operating profit margin of 7% and asset turnover ratio of 4.

Business
1 answer:
Yanka [14]3 years ago
6 0

Answer:

A) ROA = 28%

B) ROE = 20%

Explanation:

Requirement A

We know,

Return on Asset = \frac{Net Income}{Average Total Assets}

If we break the ROA formula, we can get,

ROA = \frac{Net Income}{Net Sales} × \frac{Net Sales}{Average total assets}

We know, Profit margin = Net Income ÷ Net Sales; and

Asset Turnover ratio = Net sales ÷ Average total assets

Therefore, ROA = Profit margin × Asset Turnover

Given,

Profit Margin = 7% = 0.07

Asset Turnover = 4.0

Hence, Return on Asset = 0.07 × 4 = 0.28 = 28%

It shows how assets generate income over a period.

Requirement B

We know,

Return on Equity = \frac{Net Income}{Stockholders' Equity}

If we break the formula, ROE = (Asset ÷ Equity) × (Debt Burden) × ROA

Given,

Debt-Equity ratio = 1

We know, Debt-equity ratio = \frac{Total Debt}{Total Stockholders' Equity}

As debt-equity ratio is 1, debt = equity

Therefore, assets =  2 times of debt or equity

Debt Burden = Net Income ÷ (EBIT - Interest)

Debt Burden = (EBIT - Interest - Tax) ÷ (EBIT - Interest)

Debt Burden = $(21,000 - 8,200 - 8,200) ÷ $(21,000 - 8,200)

Debt Burden = $4,600 ÷ $12,800

Debt Burden = 0.359375

We have already got ROA from requirement A, ROA = 28% = 0.28

Hence, ROE = (2 ÷ 1) × 0.359375 × 0.28

ROE = 0.20125

ROE = 20%

You might be interested in
You have a loan outstanding. It requires making three annual payments at the end of the next three years of $3000 each. Your ban
Oksana_A [137]

Answer:

The final payment would be of amount $9000

Explanation:

The keywords of the question state that the bank needs an equal amount of money by both of the payment procedures. Hence, no matter which payment method I choose on the outstanding loan, the bank would need a sum of 3x3000 = $9000

5 0
3 years ago
What is the definition of the time/value of Money A:the relationship between time money and the rate of return and their effect
jenyasd209 [6]

Answer:

The answer is B

Explanation:

6 0
2 years ago
Meredith, Linda, and Peter are working together in a project team at a home appliances company. They had to select two out of fi
I am Lyosha [343]

Answer:

a) avoiding

b) accommodation

Explanation:

a) Meredith feels uncomfortable with confrontations, she chooses to remain neutral while staying away from the discussion, so it is correct to say that she used the style of avoiding conflict resolution, which occurs when individuals prefer to avoid a situation that can generate conflicts as in the case described in the matter, and so they prefer to act diplomatically avoiding confrontations and not giving opinions contrary to a given situation.

b) Linda used the accommodation style as she gave in to Peter's demands for the choice of products. In this style, the individual values ​​the relationship with the other individual above his personal opinion, and therefore gives up on maintaining the conflict because of a situation that is less important to him than the maintenance of the relationship.

4 0
3 years ago
Hometown​ Grocery, Inc. has​ 41,000 shares of common stock outstanding and​ 5,000 shares of preferred stock outstanding. The com
nalin [4]

Answer:

Dividend Per Each Share = $0.85  per share

Explanation:

given data

common stock outstanding = 41,000 shares

preferred stock outstanding = 5,000 shares

common stock =​ $6.00 par​ value

preferred stock  4% noncumulative = $100.00 par value

total dividend payment = $55,000

solution

we get here Total Preferential Divided that is

Total Preferential Divided = Shares × Face Value × 4%     ........1

Total Preferential Divided = 100 × 5000 × 4%

Total Preferential Divided = 20000

so as that Total Equity Dividend is

Total Equity Dividend = Total Dividend - Total Equity Dividend  .............2

Total Equity Dividend = $55,000 - 20000

Total Equity Dividend = 35000

so Dividend Per Each Share will be

Dividend Per Each Share = \frac{Equity\ Dividend}{Total\ Equity\ Shares}   ..............3

Dividend Per Each Share = \frac{35000}{41000}

Dividend Per Each Share = $0.85  per share

7 0
3 years ago
What is the relationship between quality and competitiveness?
Reika [66]

The relationship between them is that to be competitive you need to produce the best Quality

<h3>Quality and competitiveness</h3>

Question Parameters:

  • Quality
  • competitiveness

Generally ,Quality speaks to the originality and all round measure of how good a thing is i comparison to another

While competitiveness is a will or desire to be the best in a group of field

Therefore, the relationship between them is that to be competitive you need to produce Quality

For more information on Measure visit

brainly.com/question/17972372

3 0
2 years ago
Read 2 more answers
Other questions:
  • Michael is unaware that it is very important for those from Japan to establish close personal relationships before talking about
    6·1 answer
  • When countries sell off state-owned enterprises and privatize them, it usually results in a(n)A. continuing drain on future natu
    14·1 answer
  • The following transactions relate to the petty cash fund of Jarvis Wrecking Company: Apr. 1 19 The petty cash fund is set up wit
    9·1 answer
  • The following transactions of Houston Pharmacies occurred during 2017 and 2018:
    6·1 answer
  • The Chambers Manufacturing Company recorded overhead costs of $14,182 at an activity level of 4,200 machine hours and $8,748 at
    11·1 answer
  • 1.Will expansionary monetary policy cause crowding out of investment in a large country in a global economy with flexible exchan
    8·1 answer
  • In this type of control system, the master budget is based on a single prediction for sales volume, and the budgeted amount for
    7·1 answer
  • Historically, the best asset for the long-term investor wanting to fend off the threats of inflation and taxes while making his
    6·1 answer
  • Within a an organizational structure, the person most likely to be evaluated in terms of controllable costs would be:___________
    12·1 answer
  • The law of demand states that, other things equal, when the price of a good Group of answer choices falls, the demand for the go
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!