The following information is available on Canadian Fire Inc. :   

Current assets: $200,000  

Fixed assets: $300,000 

 Turnover of total assets: 4 times  

Net profit: $60,000 

 Ratio of total liabilities to total assets: 20%  

Tax rate: 40%

 

 A) Determine the net sales margin, return on total assets (ROA), and return on shareholders' equity (ROE or RFP)

B) All else being equal, if the company increases its fixed assets by $100,000 and increases its net margin on sales to 5%, what will be the new rate of return on shareholders' equity?

Answer rating: 100% (QA)

A Lets start with the first part 1 Net Sales Margin Net sales margin is calculated as Net profit div... View the full answer