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Please fully answer! 8. Problem 4.11 (Ratio Calculations) ED eBook Problem Walk-Through Assume the following relationships for the Caulder Corp.: Sales/Total assets 1.7x Return on
Please fully answer!
8. Problem 4.11 (Ratio Calculations) ED eBook Problem Walk-Through Assume the following relationships for the Caulder Corp.: Sales/Total assets 1.7x Return on assets (ROA) 4.0% Return on equity (ROE) 11.0% Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Debt-to-capital ratio: % Pacific Packaging's ROE last year was only 2%, but its management has developed a new operating plan that calls for a debt-to-capital ratio of 55%, which will result in annual interest charges of $833,000. The firm has no plans to use preferred stock, and total assets equal total invested capital. Management projects an EBIT of $1,207,000 on sales of $17,000,000, and it expects to have a total assets turnover ratio of 3.1. Under these conditions, the tax rate will be 25%. If the changes are made, what will be the company's return on equity? Do not round intermediate calculations. Round your answer to two decimal places. %Step by Step Solution
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