Soto, Inc. has a total assets turnover of 1.30, a profit margin of 14 percent, and...

 

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Soto, Inc. has a total assets turnover of 1.30, a profit margin of 14 percent, and a debt ratio of 0.26. The CFO, Daniel, wants to double the current return on equity by making some changes. If he thinks that the profit margin can be boosted to 17 percent, and is comfortable with increasing the debt ratio to 0.32, how much sales revenue would have to be generated per dollar of assets (owned by the company) in order to double the return on equity? Soto, Inc. has a total assets turnover of 1.30, a profit margin of 14 percent, and a debt ratio of 0.26. The CFO, Daniel, wants to double the current return on equity by making some changes. If he thinks that the profit margin can be boosted to 17 percent, and is comfortable with increasing the debt ratio to 0.32, how much sales revenue would have to be generated per dollar of assets (owned by the company) in order to double the return on equity?

Answer rating: 100% (QA)

Lets recalculate the sales revenue per dollar of assets needed to double the return on equity Given ... View the full answer