True, and it is very sneaky. Please mark Brainliest!!!
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Answer:
Explanation:
Net Income = 20m
Sales = 100m
Debt-equity ration = 40%
Asset turnover = 0.60
A)
Profit Margin = Net Income / Sales = $20 million / $100 million = 20%
Equity Multiplier = 1 + Debt-Equity Ratio = 1 + 0.40 = 1.40
Return on Equity = Profit Margin * Asset Turnover * Equity Multiplier = 20% * 0.60 * 1.40 = 16.80%
B)
Debt-equity ratio = 60%
Equity Multiplier = 1 + Debt-Equity Ratio = 1 + 0.60 = 1.60
Return on Equity = Profit Margin * Asset Turnover * Equity Multiplier = 20% * 0.60 * 1.60 = 19.20%
As calculations provide, if debt-equity ratio increases to 60%, Return on equity will increase by 2.40% (19.20% - 16.80%)
Answer:
B) 3 scarves
Explanation:
total fixed costs per day = $60 (rent)
selling price per scarf = $40
variable cost per scarf = $15
contribution margin = selling price per unit - variable cost per unit = $40 - $15 = $25
break even formula in units = total fixed costs / contribution margin = $60 / $25 = 2.4 units, since you can only sell complete units, the break even amount is 3 scarves.