Using the Du Pont method, evaluate the effects of the followingrelationships for the Butters Corporation.
a. Butters Corporation has a profit margin of 5.5percent and its return on assets (investment) is 15.5 percent. Whatis its assets turnover? (Round your answer to 2 decimalplaces.)
b. If the Butters Corporation has adebt-to-total-assets ratio of 25.00 percent, what would the firmâsreturn on equity be? (Input your answer as a percentrounded to 2 decimal places.)
c. What would happen to return on equity if thedebt-to-total-assets ratio decreased to 20.00 percent?(Input your answer as a percent rounded to 2 decimalplaces.)
Using the Du Pont method, evaluate the effects of the followingrelationships for the Butters Corporation.
a. Butters Corporation has a profit margin of 5.5percent and its return on assets (investment) is 15.5 percent. Whatis its assets turnover? (Round your answer to 2 decimalplaces.)
b. If the Butters Corporation has adebt-to-total-assets ratio of 25.00 percent, what would the firmâsreturn on equity be? (Input your answer as a percentrounded to 2 decimal places.)
c. What would happen to return on equity if thedebt-to-total-assets ratio decreased to 20.00 percent?(Input your answer as a percent rounded to 2 decimalplaces.)
Related questions
Omni Technology Holding Company has the following threeaffiliates:
| Software | Personal Computers | Foreign Operations | |||||||
| Sales | $ | 40,990,000 | $ | 60,000,000 | $ | 100,970,000 | |||
| Net income (after taxes) | 2,064,000 | 2,690,000 | 8,970,000 | ||||||
| Assets | 5,310,000 | 25,780,000 | 60,340,000 | ||||||
| Stockholders' equity | 4,940,000 | 10,190,000 | 50,850,000 | ||||||
a-1. Compute the return on sales.(Input your answers as a percent rounded to 2 decimalplaces.)
Return on Sales
Software % ?
Personal Computers % ?
Foreign Operations % ?
b-1. Compute the return on assets.(Input your answers as a percent rounded to 2 decimalplaces.)
Return on Sales
Software % ?
Personal Computers % ?
Foreign Operations % ?
c-1. Compute the total asset turnover.(Round your answers to 2 decimal places.)
Total Asset Turnover
Software % ?
Personal Computers % ?
Foreign Operations % ?
d-1. Compute the return on stockholders'equity. (Input your answers as a percent rounded to 2decimal places.)
Return on Stockholders Equity
Software % ?
Personal Computers % ?
Foreign Operations % ?
e-1. Compute the debt ratio. (Inputyour answers as a percent rounded to 2 decimalplaces.)
Debt Ratio
Software % ?
Personal Computers % ?
Foreign Operations % ?
Omni Technology Holding Company has the following threeaffiliates:
| Software | Personal Computers | Foreign Operations | |||||||
| Sales | $ | 40,450,000 | $ | 60,930,000 | $ | 180,260,000 | |||
| Net income (after taxes) | 2,096,000 | 2,170,000 | 8,600,000 | ||||||
| Assets | 5,410,000 | 25,740,000 | 60,730,000 | ||||||
| Stockholders' equity | 4,090,000 | 10,390,000 | 50,750,000 | ||||||
a-1. Compute the return on sales.
Which affiliate has the highest return on sales?
Foreign Operations
Software
Personal Computer
b-1. Compute the return on assets.(Input your answers as a percent rounded to 2 decimalplaces.)
b-2. Which affiliate has the lowest return onassets?
Personal Computer
Software
Foreign Operations
c-1. Compute the total asset turnover.(Round your answers to 2 decimal places.)
c-2. Which affiliate has the highest totalasset turnover?
Software
Personal Computers
Foreign Operations
d-1. Compute the return on stockholders'equity. (Input your answers as a percent rounded to 2decimal places.)
d-2. Which affiliate has the highest return onstockholders' equity?
Personal Computers
Foreign Operations
Software
e-1. Compute the debt ratio. (Input youranswers as a percent rounded to 2 decimal places.)
e-2. Which affiliate has the highest debtratio?
Foreign Operations
Software
Personal Computer
