Ask Question
8 June, 08:45

Jack Corp. has a profit margin of 6.4 percent, total asset turnover of 1.77, and ROE of 15.84 percent. What is this firm's debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

+2
Answers (1)
  1. 8 June, 11:10
    0
    40%

    Explanation:

    Given that,

    Profit margin = 6.4 percent

    Total asset turnover = 1.77

    ROE = 15.84 percent

    ROE = Profit margin * Total asset turnover * Leverage ratio

    0.1584 = 0.064 * 1.77 * Leverage ratio

    Leverage ratio, EM = 0.1584 : (0.064 * 1.77)

    = 1.398 or 1.40

    Therefore,

    firm's debt-equity ratio = EM - 1

    = 1.40 - 1

    = 0.4 or 40%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Jack Corp. has a profit margin of 6.4 percent, total asset turnover of 1.77, and ROE of 15.84 percent. What is this firm's debt-equity ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers