1. The firm, MBI, has Total Assets of $190,000, Equity of
$100,000, Net Profit Margin of 3.7 percent, Total Asset Turnover of
2.89. Calculate the firm’s Return on Equity, ROE (Hint:
Use DuPont Identity). If the firm increases its
debt-equity ratio will the ROE increase or decrease?
20.32 percent, increase
20.32 percent, decrease
38.99 percent, increase
38.99 percent, decrease
5.67 percent, increase
2. A firm has Net Income of $60,800 and has Total Assets of
$601,991. The firm’s payout ratio...