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Barnes and Noble has a total debt-equity ratio of 40 percent, sales of $800,000, a net...

Barnes and Noble has a total debt-equity ratio of 40 percent, sales of $800,000, a net profit margin of 7.5 percent, and total debt of $240,000. Calculate the firm’s ROE. If the firm increases its debt-equity ratio will the ROE increase or decrease? (Hint: think about the Dupont Identity.)

  

10.00 percent, increase

  

10.00 percent, decrease

  

38.99 percent, increase

  

38.99 percent, decrease

  

5.67 percent, increase

  

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jeff jeffy answered 2 years ago
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