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Edgemont Repairs began operations on January 1, 2013. The 2013, 2014, and 2015 financial statement follow: 2013 2014 2015 Assets $8,000 $10,000 $ 30,000 Current

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Edgemont Repairs began operations on January 1, 2013. The 2013, 2014, and 2015 financial statement follow: 2013 2014 2015 Assets $8,000 $10,000 $ 30,000 Current assets 41,000 45,000 83,000 Noncurrent assets $49,000 $55,000 $113,000 Total assets Liabilities and Shareholders' Equity $ 5,000 $ 7,000 Current labilbes $12,000 10,000 50,000 10,000 Long termi labilities Shareholders' equity 38,000 34,000 51,000 Total Habilities and shareholders' equity $113,000 $55,000 $49,000 Revenues $70,000 $45,000 $37,000 Operating expenses 27,000 24,000 24,000 Interest expense 5,000 1,000 1,000 Income taxes 13,000 6,000 6,000 Net income $ 25,000 $14,000 $ 6,000 Dividends $12,000 $10,000 $2,000 Number of shares outstanding 10,000 10,000 10,000 On January 1, 2015, the company expanded operations by taking out a $40,000 long-term loan at a 10per cent annual interest rate. REQUIRED: a. Compute return on margin, and asset turnover b. On January 1, 2015, the company's common stock was issued 2,000 shares of stock, instead of borrowing the $40,000, to raise the cash needed to pay for the January 1 expansion. Recompute the ratios in (a) for 2015. Ignore any tax effects. c. Should the company have issued the equity instead of borrowing the funds? Explain. equity, return on assets, common equity leverage, capital structure leverage. pro selling for $20 per share. Assume that Edgem You are concidorim

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