Author Question: LeCompte Corp. has $406,000 of assets, and it uses only common equity capital (zero debt). Its sales ... (Read 55 times)

urmomsucks · **on:** Aug 7, 2023

Question 1

Last year, Vaughn Corp. had sales of $462,000 and a net income of $20,540, and its year-end assets were $331,000. The firm’s total-debt-to-total-assets ratio was 46.0%. Based on the DuPont equation, what was Vaughn’s ROE?

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10.05%

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11.53%

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12.65%

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13.78%

Question 2

LeCompte Corp. has $406,000 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $750,000, and its net income after taxes was $30,200. Shareholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 18%. What profit margin would LeCompte need in order to achieve the 18% ROE, holding everything else constant?

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9.52%

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9.60%

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9.74%

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9.88%

athenaheim · **Reply #1 on:** Aug 7, 2023

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