Last year Rennie Industries had sales of $350,000, assets of $175,000, a profit margin of 6%, and an equity multiplier of 1.2. The CFO believes that the company could reduce its assets by $51,000 without affecting either sales or costs.

Had it reduced its assets by this amount, and had the debt/assets ratio, sales, and costs remained constant, how much would the ROE have changed? Explain.

Answer rating: 100% (QA)

Equity Multiplier Total Assets Total Equity Total As... View the full answer