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The ROE of KoKo (Pty) Ltd. Has fallen to 6%, and the company expects its operating income (EBIT) to be R10 million. In contrast, sales
The ROE of KoKo (Pty) Ltd. Has fallen to 6%, and the company expects its operating income (EBIT) to be R10 million. In contrast, sales revenue is expected to be R60 million for the coming financial year. In addition, the companys asset turnover is expected to be 1.2 times and KoKo (Pty) Ltd. Is expected to pay R2 million in interest on debt of R20 million. The company pays a corporate tax of 28%. Calculate the companys expected debt-equity ratio.
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