Return on Investment under different current asset policies
Not what you're looking for?
ABC is attempting to establish a current assets policy. Fixed assets are $600,000 and the firm plans to maintain a 50% debt ratio. ABC has on operating current liabilities the interest rate on debt is 10%. There alternative current asset polices are under consideration: 40%.50% and 60% on sales. The company expects to earn 15% before interest and taxes on sales of $3milion. The tax rate is 40%. What is the ROI under each alternative?
Purchase this Solution
Solution Summary
The answer contains the computation of Return on investment under different current asset policies.
Solution Preview
Return on investment or Dupont ratio Net income/
Total assets
40% 50% 60%
EBIT ...
Purchase this Solution
Free BrainMass Quizzes
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.