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McKeown and Company currently has - An equity multiplier of 2.50, - A total asset turnover of 0.75, - And a profit margin of 10%.
McKeown and Company currently has
- An equity multiplier of 2.50,
- A total asset turnover of 0.75,
- And a profit margin of 10%.
The president is unhappy with the current ROE (return on equity) and he thinks it could be doubled. He will accomplish this by:
- Increasing the profit margin to 12%
- And by increasing debt utilization
- However, total asset turnover will not change.
What should be the new equity multiplier and total debt ratio to double the return on equity? USE AT LEAST 4 DECIMAL PLACES
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