Entrepreneurial Finance
6th Edition
ISBN: 9781337635653
Author: Leach
Publisher: Cengage
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Can you please give correct answer for this accounting question?
Transcribed Image Text:Firm A and Firm B have debt-total
asset ratios of 36% and 26% and
returns on total assets of 8% and
12%, respectively. What is the return
on equity for Firm A and Firm B?
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- You calculate that a firm has a total asset turnover of 0.12 and a profit margin of 0.92. If the firm reports that its ROE for the same time period is equal to 0.26, what must be the firms debt-to-equity ratio? Answer as a decimal (not percentage) to two decimal places.arrow_forwardBrowning's has a debt-equity ratio of .47. What is the equity multiplier?arrow_forwardWhich one of the following statements is correct? Multiple Choice If the total debt ratio is greater than .50, then the debt-equity ratio must be less than 1.0. Long-term creditors would prefer the times interest earned ratio be 1.4 rather than 1.5. The debt-equity ratio can be computed as 1 plus the equity multiplier. An equity multiplier of 1.2 means a firm has $1.20 in sales for every $1 in equity. An increase in the depreciation expense will not affect the cash coverage ratio. 1arrow_forward
- Andyco, Inc., has the following balance sheet, WACC calculation? 1 and an equity market-to-book ratio of 1.7. Assuming the market value of debt equals its book value, what weights should it use for its The weight of debt for the WACC calculation is %. (Round to two decimal places.) The weight of equity for the WACC calculation is%. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Liabilities & Equity Assets $1,020 Print Debt Equity Done $410 $610 — Xarrow_forwardRed Fire has a Debt/Equity Ratio of .15, and Equity Multiplier of 1.15, a return on sales of 6.4, and an asset turnover of 1.3. What is its ROE?arrow_forwardWhat is the Debt assets ratio What is the Current ratio What is the Return on common stockholders' equity enter percentages rounded to 2 demical places %arrow_forward
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