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As you can calculate, the firm has a current debt ratio ( total liabilities to total assets ) of 2 1 . 8 1 8
As you can calculate, the firm has a current debt ratio total liabilities to total assets of
If the firm had been able to increase its debt ratio in to percent, while
maintaining the same level of ROA for example, it could increase noninterest paying current
liabilities, use the proceeds to reduce equity outstanding, and there would then be no impact
on interest or on ROA by how much would the ROE have changed?
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