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Summaries of the financial statements for Wilson Electronics are shown below: Current Assets Net Fixed Assets Total Assets $300,000 $12,000,000 $15,000,000 Total Debt 6,000,000 Total
Summaries of the financial statements for Wilson Electronics are shown below: Current Assets Net Fixed Assets Total Assets $300,000 $12,000,000 $15,000,000 Total Debt 6,000,000 Total Equity 9,000,000 Total Debt & Eq. 15,000,000 Wilson generated $1,400,000 of net income on $34,000,000 of sales. Perform a Du Pont analysis of Wilson's return on equity (ROE) below: -Profit Margin X Total Asset Turnover XEquity Multiplier ROE (pick one) 16,67% 17.78% 15.56% 12.22% 20% (pick one) 4.59% 4.12% 4.74% 4.29% 5% (pick one) 2.47 2.4 2.13 2.33 2.27 (pick one) 1.33 2.67 2.33 1.67 Wilson's president is happy with most areas of the firm's operations, but she thinks the firm's asset management can be improved. Specifically, she points out that the average total asset turnover ratio in the industry is 3 times. However, she doesn't want Wilson to be "average," so she wants it to strive for a total asset turnover ratio of 4 times, which would be in line with the industry leaders. If Wilson succeeds in increasing its total asset turnover ratio without harming its other numbers, what will Wilson's new ROE be? Assume that this goal wll be achieved without affecting other ratios. 30.63% 29.63% 27.45% 31.58% 26.25%
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