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Q4. Last year Rennie Industries had sales of $350,000, assets of $175,000, a profit margin of 6%, and an equity multiplier of 1.2. The CFO
Q4. Last year Rennie Industries had sales of $350,000, assets of $175,000, a profit margin of 6%, and an equity multiplier of 1.2. The CFO believes that the company could reduce its assets by $51,000 without affecting either sales or costs. Had it reduced its assets by this amount, and had the debt/assets ratio, sales, and costs remained constant, how much would the ROE have changed? Explain. show work
1. Last year Rennie Industries had sales of $350,000, assets of $175,000, a profit margin of 6%, and an equity multiplier of 1.2. The CFO believes that the company could reduce its assets by $51,000 without affecting either sales or costs. Had it reduced its assets by this amount, and had the debt/assets ratio, sales, and costs remained constant, how much would the ROE have changed? Explain. 2. Give an example of a situation where the management of a firm is acting in a manner that is contrary to the principal goal of financial management. 3. Use the following tax table to answer this question: Bait and Tackle has taxable income of $250,000 a. b. c. d. How much does it owe in taxes? What is the average tax rate? What is the marginal tax rate? Explain the difference between average and marginal tax rateStep by Step Solution
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