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
lidiya [134]
3 years ago
11

Fix-It Co. wishes to maintain a growth rate of 9.89 percent a year, a constant debt-equity ratio of .42, and a dividend payout r

atio of 40 percent. The ratio of total assets to sales is constant at 1.3. What profit margin must the firm achieve?
Business
1 answer:
Olin [163]3 years ago
5 0

Answer:

5.43%

Explanation:

Using du point formula for return on equity formula, the profit margin can be computed by rearranging the formula to make profit margin the subject.

return on equity=profit margin*assets turnover*leverage ratio

return on equity=growth rate*(1-dividend payout ratio)=9.89%*(1-40%)=5.93%

assets turnover=sales/total assets=inverse of total assets to sales=1/1.3

leverage ratio=total assets/equity

debt-equity ratio=0.42( debt is 0.42 while equity is 1 i.e 0.42/1=0.42)

total assets=debt+equity=0.42+1=1.42

equity is 1

5.93%=profit margin*1/1.3*1.42/1

5.93%=profit margin*1.092307692

profit margin=5.93%/1.092307692

profit margin=5.43%

You might be interested in
The Wiz Co. owes $60 to its bondholders. The company expects to have a cash flow of $136 if the economy continues as is but that
Schach [20]

Answer:

$24

Explanation:

Calculation for the amount that the bondholders

will paid in the case of a recession

Using this formula

Amount to be paid by Bondholder=Decreased in cash flow- Legal and other fees

Let plug in the formula

Amount to be paid by Bondholder = $54 − $30

Amount to be paid by Bondholder= $24

Therefore the amount that the bondholders will paid in the case of a recession is $24

3 0
3 years ago
What is the most important thing that a venture capitalist is looking for in a company to invest in? discuss your response.
Simora [160]

Simply said, management is by far the most crucial aspect for astute investors. VCs invest mostly in the management team's capacity to carry out the company plan. You need a solid understanding of your market, a tested business plan, and a well-thought-out strategy for approaching venture investors if you want to distinguish out from other businesses.

In addition to this, VCs value intellectual honesty and self-awareness in founders. He has discovered from his experience as an investor that "those who are very introspective, recognize their strengths and flaws" have a higher likelihood of founding and eventually developing a successful firm.

To learn more on venture capitalist

brainly.com/question/15079917

#SPJ4

8 0
1 year ago
Roth Service Co. experienced the following transactions for 2018, its first year of operations: Provided $80,000 of services on
Stels [109]

Answer and Explanation:

a. The preparation of income statement is shown below:-

                               Income Statement

Service revenue                               $80,000

operating expenses  

Salary expenses           $28,000

Uncollectible accounts

expense                        $3,273

Total operating expense                   $31,273

Net income                                         $48,727

Working Note :-

Days       Amount     Percentage     Allowance balance

Current   $16,800       0.01                  $168

0-30         $5,100        0.05                 $255

31-60       $4,000        0.10                  $400

61-90       $2,000        0.30                 $600

Over 90

days         $3,700       0.50                  $1,850

Total        $31,600                                $3,273

b. The computation of net realizable value of the accounts receivable is shown below:-

Net realizable value = Accounts receivable - Allowance for doubtful accounts

= ($80,000 - $48,400) - $3,273

= $31,600 - $3,273

= $28,327

4 0
3 years ago
Which of the following statements is true?a. A country cannot have comparative advantage in producing a certain item if it incur
ss7ja [257]

Answer:

. All countries can gain from trade if they all specialize in production according to comparative advantage

Explanation:

Comparative advantage is when a country produces a product at a lower opportunity cost when compared with its trading partners.

Absolute advantage is when a country produces more quantities of goods and services than its trading partners.

A country can still have comparative advantage in production if opportunity cost is increasing once it's opportunity cost doesn't become greater than that of its trading partners.

A country can have comparative advantage without having absolute advantage.

I hope my answer helps you.

4 0
3 years ago
What term describes the situation where an employer changes group plan coverage to another insurer, and all employees eligible f
djverab [1.8K]

Answer: No loss, no gain

Explanation:

When an employer changes group plan to another insurer, all employees under the previous coverage would be eligible to gain under the new plan without any delay for probation.

3 0
3 years ago
Other questions:
  • Zing Inc. is a large fashion brand that manufactures clothing and shoes. The top managers of Zing have decided to use the profit
    11·1 answer
  • when your combining like terms and there is only a negative outside of the parethisis what do you do??
    8·2 answers
  • Is Universal Social Charge, Income tax or Consumer tax? ​
    8·2 answers
  • At the end of Year 2, retained earnings for the Baker Company was $3,050. Revenue earned by the company in Year 2 was $3,300, ex
    11·1 answer
  • Which market(s) has no competition
    10·2 answers
  • _____ is the ability for all organizations in a supply chain to access or view relevant data on purchased materials as these mat
    6·1 answer
  • Williams Corp. is considering signing contracts that will obligate the firm to purchase 100000 Swiss Francs worth of computer eq
    15·1 answer
  • A three-year bond has an 8.0 percent coupon rate and a $1,000 face value. If the yield to maturity on the bond is 10 percent, ca
    9·1 answer
  • Union local school district has bonds outstanding with a coupon rate of 3.2 percent paid semiannually and 16 years to maturity.
    14·1 answer
  • Using your economic knowledge and the information you learned about Oprah Winfrey compose a well-written three-paragraph biograp
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!