An increase in which of the following must increase the return on equity, all else constant?...
An increase in which of the following must increase the return on equity, all else constant? A. Net income and total equity B. Debt-equity ratio and total debt C. Total assets and sales D. Equity multiplier and total equity E. Total asset turnover and debt-equity ratio
Homework Answers
ANS) E
Total Asset turnover and Debt Equity Ratio
it will increase Return on equity now lets see with the help of example
Case 1
sales 1000
asset 400
debt 100
equity 300
Asset Turn over = sales/ asset 1000/400 = 2.5
Debt Equity Ratio= 100/300= 0.33
And now if Debt and Sales will increase it will increase both Asset Turn over ration and Debt Equity ratio and increase in Debt will also give Leverage to company which will multiply its ROE(Return on equity)
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An increase in which of the following must increase the return
on equity, all else constant?...
an increase in which of the following will increase the return on equity, all else constant...
an increase in which of the following will increase the return on equity, all else constant ? 1. total asset turnover 2. net income 3. total assets 4. debt-equity ratio a. 1 only b. 1 and 2 only c. 1, 2 and 4 only d. 1, 2 and 3 only e. 1, 2, 3, and 4
1. Which one of the following actions will increase the current ratio, all else constant? Assume...
1. Which one of the following actions will increase the current ratio, all else constant? Assume the current ratio is greater than 1.0. a. Cash purchase of inventory b. Cash payment of an account receivable C Cash payment of an account payable d. Cash sale of inventory at a loss 2. The Equity Multiplier is equal to: @ One plus the debt-equity ratio b. One plus the total asset turnover C. Total debt divided by total equity d. Total equity...
MUST SHOW ALL WORK The DuPont formula relates return on equity (Net income + Stockholders equity)...
MUST SHOW ALL WORK The DuPont formula relates return on equity (Net income + Stockholders equity) to the company's net profit margin- Net income sales asset turnover (SalesTotal assets and equity multiplier (Total assets Stockholders equity). This Company is in an industry where the average net profit margin is 6.19%, the debt-to-asset ratio (Debt. Total assets) is 27.9%, and return on equity is 20.22% Find below the Company's financial statements for year 2525 Balance Sheet, 12/31/2525 Income, 1/1 - 12/31/2525...
the DuPont formula relates return on equit The DuPont formula relates return on equity (= Net...
the DuPont formula relates return on equit
The DuPont formula relates return on equity (= Net income, - Stockholders equity) to the company's net profit margin (= Net income Sales), asset turnover (= Sales + Total assets), and equity multiplier (= Total assets + Stockholders equity). This Company is in an industry where the average net profit margin is 6.19%, the debt-to-asset ratio (= Debt + Total assets) is 27.9%, and return on equity is 20.22%. Find below the Company's...
All answers must be entererd as formulas two different questions CHAPTER 3 Saved Help Save &...
All
answers must be entererd as formulas
two different questions
CHAPTER 3 Saved Help Save & Exit Submit E F G If Roten Rooters, Inc., has an equity multiplier of 1.15, total asset turnover of 2.10, and a profit margin of 6.1 percent, what is its ROE? 1.15 Equity multiplier Total asset turnover Profit margin 2.10 6.10% Complete the following analysis. Do not hard code values in your calculations. Return on equity CHAPTER 3 Saved Help Save & Exit Submit...
Under the DuPont system, the return on assets is equal to Select one: a. the product...
Under the DuPont system, the return on assets is equal to Select one: a. the product of the gross profit margin and inventory turnover b. the sum of the debt-equity ratio and the return on sales c. the product of the return on sales and total asset turnover d. the product of the return on sales, total asset turnover, and equity multiplier e. none of the above
QUESTION 20 The Du Pont identity can be best defined by which one of the following?...
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Return on equity can increase as a result of an increase in which of the following...
Return on equity can increase as a result of an increase in which of the following ratios? Net income/ sales Sales/ total assets Total assets/ equity All of these will have a positive influence on the ROE.
1. Explain why the costs of debt and equity are expected to increase as leverage increase?...
1. Explain why the costs of debt and equity are expected to increase as leverage increase? (Note: We didn't cover this directly in class, but we talked about this indirectly. Hint: It has to do with risk) 2. If the Debt-to-Asset ratio is .46, what is the Debt-to-Equity ratio? 3. Suppose a farm business indicates an average cost of farm debt of 12%, a rate-of-return on farm assets of 15%, and a debt-to-equity ratio of 1.0. What is the firm's...
1- which one of the following is not included in net working capital? A) account receivable...
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1. Which one of the following actions will increase the current ratio, all else constant? Assume the current ratio is greater than 1.0. a. Cash purchase of inventory b. Cash payment of an account receivable C Cash payment of an account payable d. Cash sale of inventory at a loss 2. The Equity Multiplier is equal to: @ One plus the debt-equity ratio b. One plus the total asset turnover C. Total debt divided by total equity d. Total equity...
MUST SHOW ALL WORK The DuPont formula relates return on equity (Net income + Stockholders equity) to the company's net profit margin- Net income sales asset turnover (SalesTotal assets and equity multiplier (Total assets Stockholders equity). This Company is in an industry where the average net profit margin is 6.19%, the debt-to-asset ratio (Debt. Total assets) is 27.9%, and return on equity is 20.22% Find below the Company's financial statements for year 2525 Balance Sheet, 12/31/2525 Income, 1/1 - 12/31/2525...
the DuPont formula relates return on equit
The DuPont formula relates return on equity (= Net income, - Stockholders equity) to the company's net profit margin (= Net income Sales), asset turnover (= Sales + Total assets), and equity multiplier (= Total assets + Stockholders equity). This Company is in an industry where the average net profit margin is 6.19%, the debt-to-asset ratio (= Debt + Total assets) is 27.9%, and return on equity is 20.22%. Find below the Company's...
All
answers must be entererd as formulas
two different questions
CHAPTER 3 Saved Help Save & Exit Submit E F G If Roten Rooters, Inc., has an equity multiplier of 1.15, total asset turnover of 2.10, and a profit margin of 6.1 percent, what is its ROE? 1.15 Equity multiplier Total asset turnover Profit margin 2.10 6.10% Complete the following analysis. Do not hard code values in your calculations. Return on equity CHAPTER 3 Saved Help Save & Exit Submit...
QUESTION 20 The Du Pont identity can be best defined by which one of the following? A. Return on equity, total asset turnover, and equity multiplier B. Profit margin, debt-to-equity ratio, and return on equity Total asset turnover, profit margin, and debt equity ratio W.Equity multiplier, return on assets, and profit margin E. Profit margin and retum on assets
Return on equity can increase as a result of an increase in which of the following ratios? Net income/ sales Sales/ total assets Total assets/ equity All of these will have a positive influence on the ROE.
1. Explain why the costs of debt and equity are expected to increase as leverage increase? (Note: We didn't cover this directly in class, but we talked about this indirectly. Hint: It has to do with risk) 2. If the Debt-to-Asset ratio is .46, what is the Debt-to-Equity ratio? 3. Suppose a farm business indicates an average cost of farm debt of 12%, a rate-of-return on farm assets of 15%, and a debt-to-equity ratio of 1.0. What is the firm's...
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