American Capital has $375,000 of assets, and uses only common equity capital (zero debt). Sales for the last year were $420,000, and stockholders recently voted in a new management team that has promised to lower costs and increase the company's return on equity. Holding everything else constant, what profit margin would the firm need in order to achieve an ROE of 16.3%? Your answer should be between 8.54 and 18.22, rounded to 2 decimal places, with no special characters.

American Capital has $375,000 of assets, and uses only common equity capital (zero debt). Sales for the last year were $420,000, and stockholders recently voted in a new management team that has promised to lower costs and increase the company's return on equity. Holding everything else constant, what profit margin would the firm need in order to achieve an ROE of 16.3%? Your answer should be between 8.54 and 18.22, rounded to 2 decimal places, with no special characters.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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