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cupoosta [38]
3 years ago
5

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

Business
1 answer:
Stels [109]3 years ago
4 0

Answer:

a) 28%

b) 56%

Explanation:

Data provided in the question:

Operating profit margin = 7%

Asset turnover ratio = 4

Now,

a) ROA = Profit margin × Asset turnover ratio

= 7% × 4

= 28%

b) Given:

Debt-equity ratio = 1

Interest payments = $8,200

Taxes = $8,200

EBIT = $21,000

Now,

Total assets = Net income ÷ ROA

Also,

Net income = EBIT - tax - interest

= $21,000 - $8,200 - $8,200

= $4,600

Thus,

Total assets = $4,600 ÷ 28%

= $16428.57

also,

Total assets = Debt + Equity

or

Total assets = Equity × (\frac{\textup{Debt}}{\textup{Equity}}+1 )

or

$16428.57 = Equity × ( 1 + 1 )

or

=> Equity = $8214.28

Therefore,

ROE = Net income ÷ Equity

= $4,600 ÷ $8214.28

= 56%

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Answer:

B) firms reduce hours before laying off when the economy is in recession, and increase hours before hiring when the economy expands.

Explanation:

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What would happen if the European Union put a quota on American jeans and only allowed 4,000, pairs of jeans to be imported?
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If the European Union put a quota on American jeans only allowing a small portion to be imported the demand for the jeans would rise even though the supply would not follow that.  When there is a small limit on something that consumers want, the price usually goes up because they know they will sell the items regardless and in this case that may happen. The price of jeans will rise, the demand will rise, but the supply will not.

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Answer:

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The market value of​ Fords' equity, preferred​ stock, and debt are $ 7 ​billion, $ 2 ​billion, and $ 13 ​billion, respectively.
Alisiya [41]

Answer: 9.48%

Explanation:

Given Data

Debts ;

$7 billion

$2 billion

$13 billion

Beta of Fords stock = Beta = 1.50

Market risk premium = Rp = 8.0%

Risk free rate of interest = Rf = 4.0%

Equity rate = 1.7

Market risk rate = 0.8

Risk free rate = 0.03

Therefore;

Cost of Equity ( Re ) = Risk free rate + equity rate × market risk premium

= 0.03 + (1.7 × 0.8)

= 0.166

Preferred Stock Cost ( PSC)= Dividend ÷ stock price

= 4 ÷ 30

= 0.1333

Total debt = 13 + 6 + 2 = 21 billion

D% = 13 billion ÷ 21 billion

      = 0.619

E% = 6 billion ÷ 21 billion

     = 0.286

P% = 2 billion ÷ 21 billion

     = 0.095

RD = debt capital at 8% maturity rate

Tc= 30%

Rwac =(w/ preferred stock)

= Re × E% + PSC × P% + Rd ( 1- Tc) D%

Rwac = (0.166)(0.286) + (0.1333)(0.095) + (0.08)(1- 0.3)*(0.619)

= 0.094803 * 100

= 9.48%

At 30% tax rate Ford weighted average cost is 9.48%

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Answer:

aph development continues with an expression of the rationale or the explanation that the writer gives for how the reader should interpret the information presented in the idea statement or topic sentence of the paragraph. The writer explains his/her thinking about the main topic, idea, or focus of the paragrap

Explanation:

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