Kindle Fire Prevention Corp. has a profit margin of 4.8 percent, total asset tur
ID: 2383283 • Letter: K
Question
Kindle Fire Prevention Corp. has a profit margin of 4.8 percent, total asset turnover of 2.0, and ROE of 19.34 percent. What is this firm’s debt–equity ratio? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Kindle Fire Prevention Corp. has a profit margin of 4.8 percent, total asset turnover of 2.0, and ROE of 19.34 percent. What is this firm’s debt–equity ratio? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Explanation / Answer
Return on assets = Profit margin * asset turnover = 4.8 * 2 = 9.6
RoE = RoA * Debt-equity ratio
Debt equity ratio = 19.34/9.6 = 2.01
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.