Question 3

Assume that the following financial ratios were computed from the 2017 financial statements of Florida Industries:

Return on sales (profit margin)	0.29
Return on assets	0.17
Common equity leverage	0.87
Capital structure leverage	2.22
Asset turnover	1.69

If Florida holds its other ratios constant in 2018, but increases its capital structure leverage ratio to 3.20, what will be the 2018 return on equity?

Group of answer choices

15%

51%

86%

47%