A Vegetable Company has the following results: Net sales sh6,000,000 Net total assets sh4,000,000 Depreciation sh160,000 Net income sh400,000 Long-term debt sh2,000,000 Equity sh1,160,000 Dividends sh160,000 Required: a. Compute the Company’s ROE directly. % b. Using the ROE computed in Part (a) above, what is the expected sustainable growth rate for the Company? % c. Assuming the firm’s net profit margin went to 0.04, what would happen to the Company’s ROE? %

A Vegetable Company has the following results: Net sales sh6,000,000 Net total assets sh4,000,000 Depreciation sh160,000 Net income sh400,000 Long-term debt sh2,000,000 Equity sh1,160,000 Dividends sh160,000 Required: a. Compute the Company’s ROE directly. % b. Using the ROE computed in Part (a) above, what is the expected sustainable growth rate for the Company? % c. Assuming the firm’s net profit margin went to 0.04, what would happen to the Company’s ROE? %

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 3PB: The income statement comparison for Rush Delivery Company shows the income statement for the current...

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