What would be the effect on roe if nmg issued new shares

Reference no: EM133557773

Consider the components of ROA and ROE we talked about in class: (1) Profit Margin, (2) Efficiency (Turnover) and (3) Leverage (for ROE). Which term would change and in what direction if the following occurred. Answer "Plus", "Minus" or "None."

4. What would be the effect on ROA if NMG issued new shares and used the proceeds to pay off interest-bearing debt. Assume the interest expense that was avoided by paying off the debt was equal to the dividends paid on the new shares of stock. Sales, total assets and total cash were unaffected.

Profit Margin: Efficiency:

5. What would be the effect on ROE if NMG issued new shares and used the proceeds to pay off interest-bearing debt. Assume the interest expense that was avoided by paying off the debt was equal to the dividends paid on the new shares of stock. Sales, total assets and total cash were unaffected.

Profit Margin: Efficiency: Leverage:

6. What would be the effect on ROA if NMG increased total assets, but sales and profits remained the same?

Profit Margin: Efficiency:

Reference no: EM133557773

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