DuPont Analysis You Are Considering Investing in Totally Tire Services

question 5

Multiple Choice

DuPont Analysis You are considering investing in Totally Tire Services.You have been able to locate the following information on the firm: total assets = $50 million,accounts receivable = $10 million,ACP = 15 days,net income = $4.5 million,and debt-to-equity ratio = 0.75 times.What is the ROE for the firm?

• A)1.58 percent
• B)9.00 percent
• C)15.75 percent
• D)28.81 percent

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Definitions:

Proxy

A document authorizing a person to vote on another's behalf at shareholder meetings, or the individual authorized to do so.

Preemptive Right

A shareholder's right to buy new shares in a company before they are offered to the public, to maintain their proportionate ownership in the company.