Last Year Kruse Corp Had $305,000 of Assets (Which Is

question 111

Multiple Choice

Last year Kruse Corp had $305,000 of assets (which is equal to its total invested capital) ,$403,000 of sales,$28,250 of net income,and a debt-to-total-capital 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 and total invested capital to $252,500.The firm finances using only debt and common equity.Sales,costs,and net income would not be affected,and the firm would maintain the same capital structure (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:

Big Five

A model outlining five broad personality traits used to describe human personality: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Sales Representative

A professional responsible for selling products or services, often directly to customers or through intermediary businesses.

Emotional Disposition

The inherent or habitual inclination of an individual to experience and express emotions in specific ways.

Positive Affectivity

Propensity to view the world, including oneself and other people, in a positive light.