What debt ratio did Atty Tristan propose

Assignment Help Accounting Basics
Reference no: EM132576294

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

Atty. Tristan, the vice-president of corporate planning, presented a proposal as follows:

Profit margin should be raised to 15 percent.

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 percent.

What debt ratio did Atty. Tristan propose in order to raise the return on equity (ROE) to 150 percent of the present level?

A.0.52

B.0.68

C.0.61

D.0.72

Reference no: EM132576294

Questions Cloud

Great deal of time looking at leadership models : Like motivation theories, one could spend a great deal of time looking at Leadership Models.
What is the interatomic distance : A block of one mole of a certain material whose atoms are in a cubic array has dimensions of 5 cm by 4 cm by 0.5 cm. What is the interatomic distance?
Prepare statement of owner equity for July : Choose a unique business of your choice and assume its forecasted transaction which you might perform in July 2020. Prepare statement of owner equity for July
Echo chamber manifesto : Read Google's Handling of the "Echo Chamber Manifesto" and complete the questions at the end of the case study.
What debt ratio did Atty Tristan propose : What debt ratio did Atty. Tristan propose in order to raise the return on equity (ROE) to 150 percent of the present level
Role of management in 20th century : What was the role of management in the 20th century? What is the role of management in today's business world? What is the difference?
Calculate the potential difference : Calculate the potential difference VB - VA - The surfaces of the spheres are a distance L + 2d from each other, and locations A and B are a distance
Look at the three major shareholders of the company : Look at the THREE major shareholders of the company for the last five years (if available, if not just use as many years as possible).
What is the optimal cash conversion size : Gear Inc., has a total annual cash requirement of P14,700,000 which are to be paid uniformly. What is the optimal cash conversion size

Reviews

Write a Review

Accounting Basics Questions & Answers

  List types of research method used in research papers

List the different types of research method used in research papers? How we can choose a research method? What are the characteristics of a good sample?

  Discuss pays wages and accumulates employment taxes

a semiweekly depositor, pays wages and accumulates employment taxes

  Review the balance sheet of the company

HI5001 Accounting for Business Decisions Assignment. Use the annual report for the year ending 30 June 2015. Your group will need to review the major sections of this report in order to familiarize yourselves with the content of each of the financi..

  Prepare the lease payment schedule for cerise ltd

Prepare the lease payment schedule for Cerise Ltd and its journal entries to record the lease for the year ended 30 June 2012

  How many units of each product were sold

The Fleabar Co. produces two products, Xenon and Yuon. In 2010, for every 4 units of Xenon that were sold, How many units of each product were sold in 2010

  How many life vests must lakeview corporation produce

At the beginning of the year, Lakeview Corporation has 640 life vests in inventory. How many life vests must Lakeview Corporation produce during the year

  Discuss what transfer price would you recommend

Suppose Manufacturing is operating at full capacity. What transfer price would you recommend

  Determine the balance in the inventory account

Determine the balance in the Inventory account at the end of the accounting period.

  Journalize the entries to record the following

Second semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)

  Find the impact of the exhibit on company profit

The company estimates that revenue will increase by $36,000 over the next year as a result of the exhibit. How do I find the impact of exhibit on company profit

  Determine robin depletion deduction

The percentage depletion rate is 22 percent. Determine Robin's depletion deduction for 2008

  Prepare journal entries for januarys transactions

Prepare journal entries for January's transactions. Post January's transactions to the appropriate general ledger accounts.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd