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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: ___%

Expert Solution

Provided,

Computation of Profit Margin :

take reciprocal of (Assets/Total assets)

thus,

Computation of Debt-Capital ratio

take reciprocal of (Net Income/Equity)

subtract both side from 1

jeff jeffy answered 2 years ago

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: %?

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