by how much would its ROE increase?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter14: Capital Structure Management In Practice
Section: Chapter Questions
Problem 14P
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3. Tapley Dental Supply Company has the following data:
Net income 240
Sales 10,000
Total assets 6,000
Debt ratio 75%
TIE ratio 2
Current ratio 1.2
BEP ratio 13.33%
If Tapley could streamline operations, cut operating costs, and raise net income to $300 without
affecting sales or the balance sheet (the additional profits will be paid out as dividends), by how much
would its ROE increase?

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