Which of the following would best explain a situation where the ratio of (net income/total equity)...
Which of the following would best explain a situation where the ratio of (net income/total equity) of a firm is higher than the industry average, while the ratio of (net income/total assets) is lower than the industry average?
The firm's debt ratio is higher than the industry average.
The firm's equity multiplier must be lower than the industry average.
The firm's net profit margin is higher than the industry average.
The firm's asset turnover is higher than the industry average.
None of these is correct
Homework Answers
The correct answer is:
A) The firm's debt ratio is higher than the industry average.
Debt and equity totals assets. When company has more debt than industry average, it pays less of its net income to outsiders and more to its equity holders.
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Which of the following would best explain a situation where the
ratio of (net income/total equity)...
If a firm has a Return on Assets higher than the industry average, while its Return...
If a firm has a Return on Assets higher than the industry average, while its Return on Equity is below the industry average, what must be true about the firm? O A. It has a higher total asset turnover than the industry average O B. It has a higher equity multiplier than the industry average O C. It has a lower profit margin than the industry average O D. It has a lower debt ratio than the industry average Reset...
MUST SHOW ALL WORK The DuPont formula relates return on equity (Net income + Stockholders equity)...
MUST SHOW ALL WORK The DuPont formula relates return on equity (Net income + Stockholders equity) to the company's net profit margin- Net income sales asset turnover (SalesTotal assets and equity multiplier (Total assets Stockholders equity). This Company is in an industry where the average net profit margin is 6.19%, the debt-to-asset ratio (Debt. Total assets) is 27.9%, and return on equity is 20.22% Find below the Company's financial statements for year 2525 Balance Sheet, 12/31/2525 Income, 1/1 - 12/31/2525...
the DuPont formula relates return on equit The DuPont formula relates return on equity (= Net...
the DuPont formula relates return on equit
The DuPont formula relates return on equity (= Net income, - Stockholders equity) to the company's net profit margin (= Net income Sales), asset turnover (= Sales + Total assets), and equity multiplier (= Total assets + Stockholders equity). This Company is in an industry where the average net profit margin is 6.19%, the debt-to-asset ratio (= Debt + Total assets) is 27.9%, and return on equity is 20.22%. Find below the Company's...
RATIO ANALYSIS Data for Barry Computer Co. and its industry averages follow. Barry Computer Company: Balance...
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Wiggle Pools has total equity of $358,200 and net income of $47,500. The debt-equity ratio is...
Wiggle Pools has total equity of $358,200 and net income of $47,500. The debt-equity ratio is .68 and the total asset turnover is 1.2. What is the profit margin? Multiple Choice 4.82 percent 7.31 percent 6.58 percent 5.23 percent 5.67 percent Wilberton's has total assets of $537,800, net fixed assets of $412,400, long-term debt of $323,900, and total debt of $388,700. If inventory is $173,900, what is the current ratio? Multiple Choice 1.94 2.01 1.18 .52 .84
1. Which one of the following actions will increase the current ratio, all else constant? Assume...
1. Which one of the following actions will increase the current ratio, all else constant? Assume the current ratio is greater than 1.0. a. Cash purchase of inventory b. Cash payment of an account receivable C Cash payment of an account payable d. Cash sale of inventory at a loss 2. The Equity Multiplier is equal to: @ One plus the debt-equity ratio b. One plus the total asset turnover C. Total debt divided by total equity d. Total equity...
Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at...
Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at par, so the market value of its debt equals its book value. Since dollars are in thousands, number of shares are shown in thousands too. Barry Computer Company: Balance Sheet as of December 31, 2019 (In Thousands) Cash $ 122,760 Accounts payable $ 133,920 Receivables 446,400 Other current liabilities 156,240 Inventories 301,320 Notes payable to bank 55,800 Total current assets $ 870,480 Total current...
Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at...
Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at par, so the market value of its debt equals its book value. Since dollars are in thousands, number of shares are shown in thousands too. Barry Computer Company: Balance Sheet as of December 31, 2019 (In Thousands) Cash $ 84,000 Accounts payable $ 119,000 Receivables 252,000 Other current liabilities 105,000 Inventories 196,000 Notes payable to bank 84,000 Total current assets $ 532,000 Total current...
Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at...
Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at par, so the market value of its debt equals its book value. Since dollars are in thousands, number of shares are shown in thousands too. Barry Computer Company: Balance Sheet as of December 31, 2018 (In Thousands) Cash $221,260 Accounts payable $255,300 Receivables 629,740 Other current liabilities 187,220 Inventories 476,560 Notes payable to bank 170,200 Total current assets $1,327,560 Total current liabilities $612,720 Long-term...
If a firm has a Return on Assets higher than the industry average, while its Return on Equity is below the industry average, what must be true about the firm? O A. It has a higher total asset turnover than the industry average O B. It has a higher equity multiplier than the industry average O C. It has a lower profit margin than the industry average O D. It has a lower debt ratio than the industry average Reset...
MUST SHOW ALL WORK The DuPont formula relates return on equity (Net income + Stockholders equity) to the company's net profit margin- Net income sales asset turnover (SalesTotal assets and equity multiplier (Total assets Stockholders equity). This Company is in an industry where the average net profit margin is 6.19%, the debt-to-asset ratio (Debt. Total assets) is 27.9%, and return on equity is 20.22% Find below the Company's financial statements for year 2525 Balance Sheet, 12/31/2525 Income, 1/1 - 12/31/2525...
the DuPont formula relates return on equit
The DuPont formula relates return on equity (= Net income, - Stockholders equity) to the company's net profit margin (= Net income Sales), asset turnover (= Sales + Total assets), and equity multiplier (= Total assets + Stockholders equity). This Company is in an industry where the average net profit margin is 6.19%, the debt-to-asset ratio (= Debt + Total assets) is 27.9%, and return on equity is 20.22%. Find below the Company's...
QUESTION 20 The Du Pont identity can be best defined by which one of the following? A. Return on equity, total asset turnover, and equity multiplier B. Profit margin, debt-to-equity ratio, and return on equity Total asset turnover, profit margin, and debt equity ratio W.Equity multiplier, return on assets, and profit margin E. Profit margin and retum on assets
Wiggle Pools has total equity of $358,200 and net income of $47,500. The debt-equity ratio is .68 and the total asset turnover is 1.2. What is the profit margin? Multiple Choice 4.82 percent 7.31 percent 6.58 percent 5.23 percent 5.67 percent Wilberton's has total assets of $537,800, net fixed assets of $412,400, long-term debt of $323,900, and total debt of $388,700. If inventory is $173,900, what is the current ratio? Multiple Choice 1.94 2.01 1.18 .52 .84
1. Which one of the following actions will increase the current ratio, all else constant? Assume the current ratio is greater than 1.0. a. Cash purchase of inventory b. Cash payment of an account receivable C Cash payment of an account payable d. Cash sale of inventory at a loss 2. The Equity Multiplier is equal to: @ One plus the debt-equity ratio b. One plus the total asset turnover C. Total debt divided by total equity d. Total equity...
Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at par, so the market value of its debt equals its book value. Since dollars are in thousands, number of shares are shown in thousands too. Barry Computer Company: Balance Sheet as of December 31, 2018 (In Thousands) Cash $221,260 Accounts payable $255,300 Receivables 629,740 Other current liabilities 187,220 Inventories 476,560 Notes payable to bank 170,200 Total current assets $1,327,560 Total current liabilities $612,720 Long-term...
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