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poizon [28]
3 years ago
13

A firm has a net profit/pretax profit ratio of .6, a leverage ratio of 1.5, a pretax profit/EBIT of .7, an asset turnover ratio

of 4, a current ratio of 2, and a return-on-sales ratio of 6%. Its ROE is _________.
A. 15.12%
B. 20.16%
C. 30.24%
D. 7.56%
Business
1 answer:
Alenkinab [10]3 years ago
6 0

Answer:

The answer is A.15.12%.

Explanation:

Please find the below for explanation and calculations:

We have EBIT = Pretax profit /0.7 = Net profit / (0.6 x 0.7) = 0.42 x Net Profit

=> Net profit / Sales = Profit margin =  0.42 x EBIT/ Sales = 0.42 x Return-on-sales = 2.52%;

Leverage ratio = Asset/ Equity = 1.5;

Sales / Asset = asset turn over ratio = 4;

Apply the Dupont model we have:

Return on Equity = Leverage ratio x Profit Margin x Leverage ratio = 2.52% x 1.5 x 4 = 15.12%.

Thus, the answer is A. 15.12%.

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Tom [10]

A scientific theory is one that is supported by many years of experimentation all supporting the hypothesis.

8 0
3 years ago
Using the income statement method for accounting for uncollectible accounts, a company estimates that 2.5% of credit sales will
Digiron [165]

Answer:

the adjustment for estimated uncollectible accounts will require

b. Debit to Bad Debt Expense for $10,000.

Explanation:

There are two primary methods for estimating bad-debt expense. The first is an income-statement approach that measures bad debt as a percentage of sales.

Accout receivable at the end_ 80000

Credit sales_______________400000

 

Estimate________________ 2,50%

Debit bas debt expense______10000

7 0
3 years ago
Equity method for stock investment Obj. 3 Show Me How icon At a total cost of $5,600,000, Herrera Corporation acquired 280,000 s
marusya05 [52]

Answer and Explanation:

The journal entries are shown below:

1 Investment in Tran Corp $210,000  

         To Investment Income (280,000 ÷ 800,000 × $600,000)  $210,000

(Being the investment in Tran corp. is recorded)  

For recording this we debited the investment in tran corp as it increased the assets and credited the investment income as it also increased the revenue

2 Cash (280,000 × $0.50) $140,000  

           To Investment in Tran Corp  $140,000

(Being the payment of cash dividend is recorded)  

For recording this we debited the cash as it increased the assets and credited the investment in tran corp as it decreased the assets

(B) The equity method is appropriate as the Herrera owns 35% which come from

= $280,000 ÷ $800,000

= 35%

And it can be exercised when there is a significant influence or effect over the investor

6 0
3 years ago
You put aside $300 a month in an account that returns 9% a year, compounded monthly. How long do you need to contribute to save
Anettt [7]

Answer:

36 years 4 months and 2 days

Explanation:

Data provided in the question:

Monthly payment = $300

Rate of return, i = 9% = 0.09

Future value = $1,000,000

Now,

we know

Future value = Monthly payments × \left[ \frac{(1+i)^{n}-1}{i} \right]

or

1000000  = $300 × \left[ \frac{(1+0.0075)^{ }-1}{ 0.0075 }

or

\frac{ 1000000}{ 300} &= \frac{ 1.0075^{n} - 1}{ 0.0075}

3333.33333 &= \frac{ 1.0075^{n} - 1}{ 0.0075}

1.0075^{n} - 1 &= 3333.33333 \times0.0075

or

1.0075ⁿ - 1 = 25

or

1.0075ⁿ = 26

ln( 1.0075ⁿ) = ln(26)

or

n × ln( 1.0075 ) = ln(26)

or

n = [tex]\frac{ \ln (26) }{ \ln( 1.0075 ) }[tex]

or

n = 436.04  months

or

n = 36 years 4 months and 2 days

5 0
3 years ago
Read 2 more answers
A credit card had an Apr of 12.87% all of last year and compounded interest daily. What was the credit card's effective interest
alisha [4.7K]

Answer:

13.73%

Explanation:

Effective annual rate = (1 + APR / m ) ^m - 1

M = number of compounding = 365

(1 + \frac{0.1287}{365} )^{365} - 1

(1.000353)^{365} - 1 = 0.1373 = 13.73%

7 0
3 years ago
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