Caillou Guiliano Incorporated recently reported the following information: (Sales )/(Total Assets) : 2.25 Return on Assets...

Caillou Guiliano Incorporated recently reported the following information:
(Sales )/(Total Assets) : 2.25 Return on Assets (ROA) : 4.5% Return on Equity (ROE) : 7.5%
Assuming the firm uses only debt and common equity, so total assets equal total invested capital.
Answer the following questions: What is Caillou Gulliano's debt-to-capital ratio?
a) 20% b) 50% c) 40% d) 35% e) 25%

Solutions

Expert Solution

ROA=net income/Total assets

net income=0.045*Total assets

ROE=net income/equity

net income=0.075*equity

Total assets=Total liabilities+Total equity

Debt=(net income/0.045)-(net income/0.075)

=8.8889*Net income

Debt to capital ratio=debt/Total capital

(8.8889*Net income)/(Net income/0.045)

=40%

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Sales/Total assets = 4.5× Return on assets (ROA) = 10.0% Return on equity (ROE) = 50.0%...

Sales/Total assets = 4.5× Return on assets (ROA) = 10.0% Return on equity (ROE) = 50.0% Book Value of Stockholders’ equity = $30 Price/Earnings ratio = 6.0x Common shares outstanding = 50 Market/Book ratio = 3.0x A. Calculate the price of a share of the company’s common stock. B. Calculate debt-to-assets ratio assuming the firm uses only debt and common equity. C. What were sales last year? D. What is the company’s market value?

Assume the following relationships for the Caulder Corp.: Sales/Total assets 2.3× Return on assets (ROA) 5.0%...

Assume the following relationships for the Caulder Corp.: Sales/Total assets 2.3× Return on assets (ROA) 5.0% Return on equity (ROE) 9.0% Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places. Profit Margin: %? Debt-to-capital ratio: %?

RATIO CALCULATIONS Assume the following relationships for the Caulder Corp.: Sales/Total assets 1.5x Return on assets...

RATIO CALCULATIONS Assume the following relationships for the Caulder Corp.: Sales/Total assets 1.5x Return on assets (ROA) 4% Return on equity (ROE) 9% Calculate Caulder's profit margin assuming the firm uses only debt and common equity, so total assets equal total invested capital. Round your answer to two decimal places. % Calculate Caulder's debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Round your answer to two decimal places. %

RATIO CALCULATIONS Assume the following relationships for the Caulder Corp.: Sales/Total assets 2.1x Return on assets...

RATIO CALCULATIONS Assume the following relationships for the Caulder Corp.: Sales/Total assets 2.1x Return on assets (ROA) 6% Return on equity (ROE) 8% Calculate Caulder's profit margin assuming the firm uses only debt and common equity, so total assets equal total invested capital. Round your answer to two decimal places. Calculate Caulder's debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Round your answer to two decimal places.

Assume the following relationships for the Caulder Corp.: Sales/Total assets 1.3× Return on assets (ROA) 5.0%...

Assume the following relationships for the Caulder Corp.: Sales/Total assets 1.3× Return on assets (ROA) 5.0% Return on equity (ROE) 9.0% Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: ___% Debt-to-capital ratio: ___%

Assume the following relationships for the Caulder Corp.: Sales/Total assets 2.1× Return on assets (ROA) 4.0%...

Assume the following relationships for the Caulder Corp.: Sales/Total assets 2.1× Return on assets (ROA) 4.0% Return on equity (ROE) 9.0% Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: ____% Debt-to-capital ratio: ____% Pacific Packaging's ROE last year was only 3%, but its management has developed a new operating plan that...

Assume you are given the following relationships for the Haslam Corporation: Sales/total assets 1.2 Return on...

Assume you are given the following relationships for the Haslam Corporation: Sales/total assets 1.2 Return on assets (ROA) 4% Return on equity (ROE) 7% Calculate Haslam's profit margin and liabilities-to-assets ratio. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: ?% Liabilities-to-assets ratio: ?% Suppose half of its liabilities are in the form of debt. Calculate the debt-to-assets ratio. ? Do not round intermediate calculations. Round your answer to two decimal places.

Assume you are given the following relationships for the Haslam Corporation: Sales/total assets 1.6 Return on...

Assume you are given the following relationships for the Haslam Corporation: Sales/total assets 1.6 Return on assets (ROA) 4% Return on equity (ROE) 6% Calculate Haslam's profit margin and liabilities-to-assets ratio. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Liabilities-to-assets ratio: % Suppose half of its liabilities are in the form of debt. Calculate the debt-to-assets ratio. Do not round intermediate calculations. Round your answer to two decimal places. %

Assume you are given the following relationships for the Haslam Corporation: Sales/total assets 1.8 Return on...

Assume you are given the following relationships for the Haslam Corporation: Sales/total assets 1.8 Return on assets (ROA) 4% Return on equity (ROE) 6% Calculate Haslam's profit margin and liabilities-to-assets ratio. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Liabilities-to-assets ratio: % .Suppose half of its liabilities are in the form of debt. Calculate the debt-to-assets ratio. Do not round intermediate calculations. Round your answer to two decimal places. %

Broward Manufacturing recently reported the following information:

Broward Manufacturing recently reported the following information:Net income $720,000ROA 7%Interest expense $223,200Accounts payable and accruals $1,050,000 Broward's tax rate is 30%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, while 60% of its total invested capital is common equity.Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Do not round intermediate calculations. Round your answers to two...

Subjects