The person who owns the property right in a contract.
Answer:
(a) 14.9107%
(b) 17.9095%
(c) 21.13321%
Explanation:
Given that,
Net profit margin = 3.58%
Total asset turnover = 1.75
Total assets = $42.6 million
Book value of equity = $ 17.9 million
(a) firm's current ROE:
= Net income ÷ Total equity
= Net profit margin × Assets turnover × (Assets ÷ Equity)
= (Net income ÷ sales) × (sales ÷ assets) × (Assets ÷ Equity)
= 3.58% × 1.75 × ($42.6 ÷ $17.9)
= 3.58% × 1.75 × 2.38
= 14.9107%
(b) If the firm increased its net profit margin to 4.30 %,
ROE:
= 4.30% × 1.75 × ($42.6 ÷ $17.9)
= 4.30% × 1.75 × 2.38
= 17.9095%
(c) If, in addition, the firm increased its revenues by 18%,
Asset turnover increases by:
= 1.75 × 1.18
= 2.065
ROE:
= 4.30% × 2.065 × ($42.6 ÷ $17.9)
= 4.30% × 2.065 × 2.38
= 21.13321%
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When all authorized shares of a corporation’s stock have the same rights and characteristics, the stock is called a common stock.
<h3>What is a common stock?</h3>
A common stock gives the holder ownership rights in the public company that issues the stock. Common stocks are issued to raise capital for business operations.
Common stocks gives the holder to receive dividend and it grants the holder voting rights.
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