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Calculate brauer profit margin and debt ratio

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Reference no: EM132539663

Question 1:  Bartley Barstools has an equity multiplier of 2.4. The company's assets are financed with some combination of long-term debt and common equity. What is the company's debt ratio?

Question 2:  Assume you are given the following relationships for the Brauer Corporation:

Sales/total assets 1.5X

Return on assets (ROA) 3%

Return on equity (ROE) 5%

Calculate Brauer's profit margin and debt ratio.

Question 3: Midwest Packaging's ROE last year was only 3 percent, but its management has developed a new operating plan designed to improve things. The new plan calls for a total debt ratio of 60 percent, which will result in interest charges of $300,000 per year. Management projects an EBIT of $1,000,000 on sales of $10,000,000, and it expects to havea total assets turnover ratio of 2.0. Under these conditions, the tax rate will be 34 percent. If the changes are made, what return on equity will the company earn?

Reference no: EM132539663

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