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kotykmax [81]
2 years ago
9

Pacific Packaging's ROE last year was only 3%, but its management has developed a new operating plan that calls for a debt-to-ca

pital ratio of 45%, which will result in annual interest charges of $546,000. The firm has no plans to use preferred stock and total assets equal total invested capital. Management projects an EBIT of $1,344,000 on sales of $14,000,000, and it expects to have a total assets turnover ratio of 3.2. Under these conditions, the tax rate will be 25%. If the changes are made, what will be the company's return on equity?
Business
1 answer:
777dan777 [17]2 years ago
6 0

Answer:

Explanation:

Total asset turnover = Sales/total assets

3.2= 14000000/Total assets

Total assets = 4375000

E/A = 1-D/A = 1-0.45 = 0.55

Equity = E/A*assets = 0.55*4375000=2406250

Net income = (EBIT-interest)*(1-tax rate)

=(1344000-546000)*(1-0.25)=598500

ROE = Net income/total equity

ROE% = 598500/2406250=0.248

ROE% = 24.8

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2 years ago
The corporate charter of Imp Company authorized the issuance of 10 million, $1 par common shares. During 2021, its first year of
lesantik [10]

Answer:

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Explanation:

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7 0
3 years ago
Mustang Corporation had 100,000 shares of $2 par value common stock outstanding. On December 31, 2018, the company's board of di
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Answer:

<u>December 31, 2018</u>

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6 0
3 years ago
Productivity is generally more difficult to improve in the service sector than in the manufacturing sector. True False
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Answer: True

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1. Service industries are labor-intensive

2. Measuring and monitoring service quality are difficult

3. Most service establishments are of small size

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If the U.S. government was concerned that the depreciating value of the US$ caused the Japanese government unstable, it would se
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If the U.S. government was concerned that the depreciating value of the US$ caused the Japanese government unstable, it would sell yen in the foreign exchange market. If successful the $/yen exchange rate would decline.

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This value will decline as the dollar begins to appreciate.

The average Nikkei 225 fell by 7.2 percent relative to its April point at 14 May. And, in April, the yen increased to 109-110 from 112-113 to the dollar. The fall of the stock market did not cause the yen to rise for the first time. As the following chart shows, Japan's stock market downturn has been strongly influenced since 2004 by a high yen as a result of the increase in stock prices.

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