Travel Corp

question 40

Essay

Travel Corp. has net income of $1.95 million, an effective tax rate of 35%, interest expense of $400,000, an asset turnover of 2, and $14 million in total assets, of which $7 million is debt. Use the DuPont system to calculate its ROE, decomposed into leverage ratio, asset turnover, profit margin, and debt burden.

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Definitions:

Scheme

An action pattern or mental structure that is involved in the acquisition and organization of knowledge.

Genotype

The genetic form or constitution of a person as determined by heredity.

Anal Stage

The second stage in Freud's theory of psychosexual development, occurring approximately between the ages of 18 months and three years, where the focus of pleasure shifts to the anus and includes behaviors associated with toilet training.

Oral Stage

The first phase in Freud's psychosexual development theory, where a child's pleasure centers are focused on the mouth area.