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Profit margin and ROE 10 . Hindelang Housewares Company (HHC) has $2,000,000 of assets, and it uses only common equity capital (zero debt).

Profit margin and ROE

10. Hindelang Housewares Company (HHC) has $2,000,000 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $1,600,000, and its net income was $160,000. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15%. What profit margin would HHC need in order to achieve the 15% ROE? Assume that the new actions will have no effect on total assets and sales, and it will not change the company's determination to use 100% equity to finance its operations.

a. 15.00%

b. 18.75%

c. 20.00%

d. 22.50%

e. 25.45%

Top Answer

Answer to the Question will be option B) 18.75% . as the Company has no debt there will be no sharing of... View the full answer

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Other Answers

The answer to this question... View the full answer

b. 18.75% is the profit margin... View the full answer

In this question, there is no debt. So, Common equity is equal to the Total assets which is $ 2000000.... View the full answer

Return on equity: Return on equity is the net income that is returned to... View the full answer

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