What equity multiplier is required to double return equity

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UM Graduation Supplies has debt-to-equity ratio of 80%, profit margin of 10%, total sales of 10 million and total assets of 5 million. The president is unhappy with the current return on equity, and he thinks it could be doubled. This could be accomplished by (1) increasing the profit margin to 15% and (2) increasing debt utilization. Total asset turnover will not change. What new equity multiplier is required to double the return on equity?

Reference no: EM13937447

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