Last Year Kruse Corp Had $305,000 of Assets, $403,000 of Sales

question 100

Multiple Choice

Last year Kruse Corp had $305,000 of assets, $403,000 of sales, $28,250 of net income, and a debt-to-total-assets ratio of 39%. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets to $252,500. Sales, costs, and net income would not be affected, and the firm would maintain the same debt ratio (but with less total debt) . By how much would the reduction in assets improve the ROE?

• A) 2.85%
• B) 3.00%
• C) 3.16%
• D) 3.31%
• E) 3.48%

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Definitions:

Lethal Means

Methods or devices that are capable of causing death.

Suicide Rate

Suicide rate is a statistical measure that reflects the number of suicides occurring in a given population during a specified period of time.

Minorities

Groups of people differentiated from the societal majority through ethnic, racial, religious, or cultural identity, often facing different degrees of economic, social, or political challenges.

Specific Phobia

An intense, irrational fear of a specific object, situation, or activity that leads to avoidance behaviors and can significantly impact daily functioning.