For fiscal year 2021, Costco Wholesale Corporation (COST) had a net profit margin of 2.60%, asset turnover

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For fiscal year 2021, Costco Wholesale Corporation (COST) had a net profit margin of 2.60%, asset turnover of 3.24, and a book equity multiplier of 3.28.

a. Use this data to compute Costco’s ROE using the DuPont Identity.

b. If Costco’s managers wanted to increase its ROE by one percentage point, how much higher would their asset turnover need to be?

c. If Costco’s net profit margin fell by one percentage point, by how much would their asset turnover need to increase to maintain their ROE?

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Corporate Finance

ISBN: 9780137845071

6th Edition

Authors: Jonathan Berk, Peter DeMarzo

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Question Posted: Jun 12, 2024 01:02 AM

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For fiscal year 2021, Costco Wholesale Corporation (COST) had a net profit margin of 2.60%, asset turnover

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Corporate Finance

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