What is its return on shareholders equity

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Question - K Y Shoe Stores has $2,000,000 in sales and turns over its assets 2.5 times per year. The firm earns 3.8 percent on each sales dollar. It has $60,000 in current liabilities and $140,000 in long-term liabilities.

a. What is its return on shareholders' equity?

b. If the asset base remains the same as computed in part a, but total asset turnover goes up to 3, what will be the new return on shareholders' equity? Assume the profit margin stays the same as does current and long-term liabilities.

Reference no: EM133103854

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