Last year, K9 Webbwear, Incorporated reported an ROE of 16 percent. The firm's debt ratio was 55 percent, sales were $20 million, and the capital intensity was 1.25 times. This year, K9 WebbWear plans to increase its debt ratio to 60 percent. The change will not affect sales or total assets, however, it will reduce the firm's profit margin to 10 percent. Calculate the net income and profit margin for K9 WebbWear last year. By how much will the change in K9 WebbWear's debt ratio affect its ROE? Complete this question by entering your answers in the tabs below. Net income and Profit margin Changes of ROE Calculate the net income and profit margin for K9 WebbWear last year. Note: Enter your answer in millions of dollars rounded to 2 decimal places. Round your percentage answer to 2 decimal places. Net income (last year) Profit margin (last year) million %
Last year, K9 Webbwear, Incorporated reported an ROE of 16 percent. The firm's debt ratio was 55 percent, sales were $20 million, and the capital intensity was 1.25 times. This year, K9 WebbWear plans to increase its debt ratio to 60 percent. The change will not affect sales or total assets, however, it will reduce the firm's profit margin to 10 percent. Calculate the net income and profit margin for K9 WebbWear last year. By how much will the change in K9 WebbWear's debt ratio affect its ROE? Complete this question by entering your answers in the tabs below. Net income and Profit margin Changes of ROE Calculate the net income and profit margin for K9 WebbWear last year. Note: Enter your answer in millions of dollars rounded to 2 decimal places. Round your percentage answer to 2 decimal places. Net income (last year) Profit margin (last year) million %
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 13P
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