Last Year Blease Inc Had a Total Assets Turnover of 1.33

question 126

Multiple Choice

Last year Blease Inc had a total assets turnover of 1.33 and an equity multiplier of 1.75.Its sales were $270,000 and its net income was $10,600.The firm finances using only debt and common equity,and its total assets equal total invested capital.The CFO believes that the company could have operated more efficiently,lowered its costs,and increased its net income by $10,250 without changing its sales,assets,or capital structure.Had it cut costs and increased its net income by this amount,how much would the ROE have changed? Do not round your intermediate calculations.

• A) 9.10%
• B) 10.60%
• C) 10.25%
• D) 6.72%
• E) 8.84%

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Definitions:

Service Industries

Sectors that provide non-physical goods or services to consumers or other businesses.

ABC

Activity-Based Costing, a methodology that assigns overhead and indirect costs to related products and services based on their use of resources.

Traditional Product Costing

A costing method that assigns manufacturing overhead costs to products based on volume-related measures such as direct labor hours or machine hours.

Non-manufacturing Costs

Expenses that are not directly involved in the production of goods, including selling, general, and administrative expenses.