Assume that the following financial ratios are calculated for Royals Corporation in 2012: Asset turnover 0.625 Common
Question:
Assume that the following financial ratios are calculated for Royals Corporation in 2012:
Asset turnover 0.625
Common equity leverage 0.685
Capital structure leverage 2.50
Return on assets 9.50%
Return on sales (profit margin) 15.20%
a. What was the return on equity for Royals Corporation in 2012?
b. If Royals Corporation keeps all of its other ratios constant in 2013 but increases its capital structure leverage ratio 2.75, what will be the 2013 return on equity?
c. If Royals Corporation keeps all of its other ratios constant in 2013 but increases its profit margin to 16%, what will be the 2013 return on equity?
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a ROE ROA Common Equity Leverage Capital Structure Leverage therefore ROE 0...View the full answer
