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.
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
Sign up to 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