Chapter 3, Problem 15P

a.

Summary Introduction

To calculate: The asset turnover when the profit margin is $7\%$ and return on assets is $25.20\%$ .

Introduction:

Asset turnover:

It is a ratio that computes that competence a firm has to use its assets for the generation of income or sales revenue for the firm.

b.

Summary Introduction

To determine: The return on equity of Butters Corporation when the debt-to-asset ratio is $50\%.$

Introduction:

Return on equity:

It shows the financial performance of a firm by dividing the net income with shareholders’ equity. It is a ratio that helps the company measure its profitability with respect to its equity.

c.

Summary Introduction

To determine: The return on equity of Butters Corporation when the debt-to-total-assets ratio is decreased to 35%.

Introduction:

Return on equity:

It shows the financial performance of a firm by dividing the net income with shareholders’ equity.