<u>Calculation of Increase in Leverage ratio to achieve 20% ROE:</u>
The current ROE is given 15% and operating profit margin and asset turnover ratio are 8% and 1.25, respectively.
The formula for ROE is as follows:
ROE = Operating profit margin * Asset turnover ratio * Leverage ratio
We can say that :
Leverage ratio = ROE / (Operating profit margin * Asset turnover ratio)
Hence Current Leverage Ratio = 15% / (8%*1.25) = 1.5 times
Now we are asked to get ROE 20% with operating profit margin and asset turnover ratio at 8% and 1.25, respectively.
Hence,
Required Leverage Ratio = 20% / (8%*1.25) = 2 times
Hence Leverage Ratio should Increase by (2-1.5)<u> 0.5 times</u> to get the ROE of 20%
Answer: Florence is working with a company that uses the transnational strategy.
Explanation:
Definition: A transnational strategy refers to a strategy with planned actions that a company has put in place inorder to start an operation in abroad markets. They function in foreign countries but still keep their core business in one particular location.
This strategy uses the great benefits of operating in different locations which may increase sales. The central office manages the other branches which are spread into other countries.
This is false, you have to put your personal life aside due to the fact that it is business. hope this helps, have an amazing day :)<span />