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
kakasveta [241]
3 years ago
9

7. DuPont Identity. X Corp. has net income of $20 million, Sales of $100 million, asset turnover of .6, and debt-equity ratio of

40%. a. What is its return on equity? b. If X increases its debt-equity ratio to 60%, what happens to its return on equity?
Business
1 answer:
goldfiish [28.3K]3 years ago
7 0

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%)

You might be interested in
Marsha and Antonio make a contract in which Marsha agrees to sell Antonio an expensive and rare piece of art. In the contract, M
kramer

Marsha and Antonio's statements are examples of representations and warranties, as in a contract for the purchase and sale of a work of art there must be agreements that protect and benefit the parties.

<h3 /><h3>Features of a contract</h3>

Corresponds to a formal and consensual document that must be based on legality to identify an economic transaction between two or more parties, establishing the rights and obligations of both.

Therefore, for it to be valid, the parties must be in full capacity and competence, in addition to the need for autonomy of will, the obligation and supremacy of public order.

The correct answer is:

B. Representations and warranties

Find out more information about legal contract here:

brainly.com/question/8935110

5 0
2 years ago
What is the difference between a nominal value and a real value?a. A nominal value is measured in monetary units adjusted for in
Allushta [10]

Answer:

In economics, nominal value refers to the current monetary value and does not adjust for the effects of inflation

Explanation:

6 0
3 years ago
In a command economy, the goods and services that a country produces, the quantity in which they are produced, and the prices at
IrinaK [193]

Answer:

In a command economy, the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold are planned by the government

The government plans the goods and services that a country produces, the quantity in which they are produced, and the price at which they are sold.

8 0
2 years ago
Swifty Corporation has the following budgeted sales: January $30000, February $90000, and March $50000. 40% of the sales are for
klasskru [66]

Answer:

Total cash collection= $62,000

Explanation:

Giving the following information:

40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month.

Sales:

January $30000

February $90000

March $50000

<u>Cash collection March:</u>

Sales in account February= (90,000*0.6)*0.5= 27,000

Sales in account March= (50,000*0.6)*0.5= 15,000

Sales in cash March= (50,000*0.4)= 20,000

Total cash collection= $62,000

4 0
3 years ago
EcoAthlete determines that the target market for its running shoes is people who are environmentally conscious. It uses only env
Whitepunk [10]

Answer:

C) Lifestyle and Behavior

Explanation:

The reason is that Eco-Athlete is using its customer behavior and lifestyles to target a particular market segment which has common thinking and opinion about a particular item. In this case, Eco-Athlete is using Eco-friendly items because its customer are environmentally conscious which is their behavior that effects their lifestyle. So the company Eco-Athlete is basically using lifestyle and behavior dimension of market segmentation.

3 0
3 years ago
Other questions:
  • The town of Genter recently witnessed a devastating hurricane that crippled the town's infrastructure. Q-Mart, a retail chain th
    11·1 answer
  • For a school to be accredited, it must be certified in all of the following except _____.
    15·2 answers
  • A cost associated with home buying would be:
    7·2 answers
  • What is trade in economics​
    6·2 answers
  • When consumers buy _____ products, then producers make _____ goods and services. This can lead to economic growth.
    14·1 answer
  • It is blank for motorcycles to pass between cars in the middle of traffic lanes
    5·1 answer
  • Suppose that in the base period a college student buys 20 gallons of gasoline at $2 per gallon, 2 CDs for $13 each, and 4 movie
    6·1 answer
  • 7. The stock of Top of the Muffin currently pays a dividend of $11.40. The dividend is expected to grow by 20% per year for the
    6·1 answer
  • Which of the following is a factor that is usually considered in a cost benefit
    8·1 answer
  • A ticket to a concert costs $45. You have a ticket and can resell it for $75. Your opportunity cost of actually attending the co
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!