Jack Corp. has a profit margin of 8.70 percent, total asset turnover of 1.43, and ROE...

Jack Corp. has a profit margin of 8.70 percent, total asset turnover of 1.43, and ROE of 18.72 percent. What is the firm's debt-equity ratio?

Expert Solution

ROE = (PM)(TAT)(EM)

0.1872 = (0.0870)(1.43)(EM)

EM = 0.1872 / (0.0870 * 1.43)

EM = 1.50

D/E = EM – 1

D/E = 1.50 – 1

D/E = 0.50

jeff jeffy answered 2 years ago

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