Management has announced new procedures for new project launches. Stella and Dani reviewed the new procedures and compared them
1 answer:
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Answer:
<u>Bethesda Mining</u>
<u>Common-size Balance Sheets for as at </u>
2018 2019
% %
Assets
Current Assets
Cash 5.91 7.23
Accounts Receivable 7.00 8.96
Inventory 13.67 20.27
Total 26.58 36.46
Fixed Assets
Net Plant and Equipment 73.41 63.54
Total Assets 100.00 100.00
Liabilities and Owners` Equity
Current Liabilities
Accounts Payable 21.13 21.23
Notes Payable 9.43 14.66
Total 30.55 35.90
Long term debt 26.32 18.61
Owners` Equity
Common Stock and Paid in surplus 24.43 23.60
Accumulated Retained Earnings 18.70 21.89
Total 43.12 45.48
Total Liabilities and Owners` Equity 100.00 100.00
Explanation:
<em>Hi, I have attached the full question as an image below.</em>
In a Common Size Statement of Financial Position, each item is expressed as a percentage of Total Assets.
So, the first step is to determine the Total Assets for the Period you want work with. Next, express each item as a percentage of the Total Sales
Answer:
The correct option is D
There is increase in ROE by 2.86%
d. 2.86%
EXPLANATION:
THIS IS THE COMPLETE QUESTION BELOW;
Last year Swensen Corp. had sales of $303,225, operating costs of $267,500, and year-end assets of $195,000. The debt-to-total-assets ratio was 27%, the interest rate on the debt was 8.2%, and the firm's tax rate was 37%. The new CFO wants to see how the ROE would have been affected if the firm had used a 45% debt ratio. Assume that sales and total assets would not be affected, and that the interest rate and tax rate would both remain constant. By how much would the ROE change in response to the change in the capital structure?
a. 2.08%
b. 2.32%
c. 2.57%
d. 2.86%
e. 3.14%
CHECK THE ATTACHMENT BELOW FOR DETAILED EXPLANATION
