Jones Group has been generating stable after-tax return on equity (ROE) despite declining operating income. Explain how it might be able to maintain its stable after-tax ROE.
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Jones Group has been generating stable after-tax
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- Does decreasing net margin percentages and slightly increasing financial leverage have an effect on Return on Equity (ROE)?. If Yes, What should a company do to solve such problem.Which one of the following is minimized when the value of the firm is maximized? A- WACC B- Return on equity C-Debt D-Taxes E- Bankruptcy costsWhich of the following does NOT always increase a company’s MVA? Group of answer choices: Increasing the expected growth rate of sales Decreasing the capital requirements (Capital/Sales) Decreasing the weighted average cost of capital Increasing the expected operating profitability (NOPAT/Sales) Increasing the expected rate of return on invested capital
- You observe that a firm?s profit margin is below the industry average, while its return on equity and debt ratio exceed the industry average. What can you conclude?State if each of the following would increase or decrease AFN. A high growth rate. A low capital intensity ratio. A low spontaneous liabilities-to-sales ratio. A high profit margin. A low payout ratio.Is the claim that lower company taxes adding to investments correct or is it debatable given the prediction on economic growth remains negative, and can you explain why? Your advise on this is ____________________ (provide your answer and justification. Feel free to use external resources to assist you in your answer if you prefer).
- Below is an equation that breaks down the concept of Return on Equity into its components (individual parts). ROE = Net income Sales Net Profit margin Sales Total assets Asset turnover ROA X Total assets Total equity Equity multiplier Using this equation, explain briefly how a company can improve its Return on Assets (ROA), and the impact of this improvement on its Return on Equity (ROE). Is an improvement in ROA that the only way that ROE can increase?If a firm wishes to retain the same return on equity when its net profit margin and total asset turnover has declined, it must ____. a. increase its equity multiplier b. decrease its equity multiplier c. reduce sales and increase assets d. increase sales and increase assetsWhich of the following statements is CORRECT? a. WACC calculations should be based on the before-tax costs of all the individual capital components. b. Flotation costs associated with issuing new common stock normally reduce the WACC. c. An increase in the risk-free rate will normally lower the marginal costs of both debt and equity financing. d. A change in a company's target capital structure cannot affect its WACC. e. If a company's tax rate increases, then, all else equal, its weighted average cost of capital will decline.
- If a sales increase is forecasted, how will it affect expenses on the pro forma income statement if market conditions are expected to remain stableBarnes plans to use the preceding ratios as the starting point for discussions with SKI’s operating executives. He wants everyone to think about the pros and cons of changing each type of current asset and how changes would interact to affect profits and EVA. Based on the data, does SKI seem to be following a relaxed, moderate, or restricted working capital policy?An investor wants to determine if his investment in Bulldogs Inc. gives him a good return. Which of the following is the most appropriate to use? a. Times interest earned ratio b. Dividend yield c. Total asset turnover d. Operating profit margin