Answered step by step
Verified Expert Solution
Question
1 Approved Answer
hello! may you please assist? thank you!! Last year Kruse Corp had $380,000 of assets (which is equal to its total invested capital). $403,000 of
hello! may you please assist? thank you!!
Last year Kruse Corp had $380,000 of assets (which is equal to its total invested capital). $403,000 of sales, $30,000 of net income, and a debt-to-total-capital ratio of 395. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets and total invested capital to $256,000. The firm Pances using only debt and common equity. Sales, costs, and net income would not be affected, and the firm would maintain the same capital structure (but with less total debe). By how much would the reduction in assets improve the ROE? Do not round your intermediate calculations a. 9.81 p.p. b. 0.00 p.p. c. 3.82 p.p. d. 8.72 p.p. e. 6.27 p.p Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started