The board of directors of Aggressive Company was unhappy with the current return on common equity. Though the return on sales (profit margin) was impressively good at 12.5%, the asset turnover was only 0.75%, the present debt ratio is 0.40.

Ms. Sylvia Moreno, the vice-president of corporate planning, presented a proposal as follows:

Profit margin should be raised to 15%

The new capital structure will be revised by raising debt component

The asset turnover will be maintained at 0.75.

The proposed adjustment is estimated to raise return on equity by 50%. What is debt ratio did Ms. Moreno propose in order to raise the return on equity to 150% of the present level.