Roland & Company Has a New Management Team That Has

question 79

Multiple Choice

Roland & Company has a new management team that has developed an operating plan to improve upon last year's ROE. The new plan would place the debt ratio at 55 percent which will result in interest charges of $7,000 per year. EBIT is projected to be $25,000 on sales of $270,000, and it expects to have a total assets turnover ratio of 3.0. The average tax rate will be 40 percent. What does Roland & Company expect return on equity to be following the changes?

• A) 17.65%
• B) 21.82%
• C) 26.67%
• D) 44.44%
• E) 51.25%

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Definitions:

Horizontal Transfer

The movement or application of skills and knowledge across similar tasks or contexts at the same level of complexity.

Vertical Transfer

The movement or sharing of skills, knowledge, or information from higher to lower levels within an organization, or vice versa.

Distinguish

To recognize or point out differences between two or more items, concepts, or phenomena, often highlighting unique or distinguishing characteristics.

Management

Management involves the planning, organizing, directing, and controlling of resources, such as personnel, finances, and assets, to achieve organizational goals efficiently and effectively.