Question
Consider a retail firm with a net profit margin of 3.03%, a total asset turnover of 1.89, total assets of $45.7 million, and a book
Consider a retail firm with a net profit margin of 3.03%, a total asset turnover of 1.89, total assets of $45.7 million, and a book value of equity of $18.4 million.
a. What is the firm's current ROE?
b. If the firm increased its net profit margin to 3.94 % what would be its ROE?
c. If, in addition, the firm increased its revenues by 21% (maintaining this higher profit margin and without changing its assets or liabilities), what would be its ROE?
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International Finance Theory And Policy
Authors: Paul R. Krugman, Maurice Obstfeld, Marc Melitz
11th Global Edition
1292238739, 978-1292238739
