Chang Corp

question 26

Multiple Choice

Chang Corp. has $375,000 of assets, and it uses only common equity capital (zero debt) . Its sales for the last year were $595,000, and its net income was $25,000. Stockholders recently voted in a new management team that has promised to lower costs and raise the return on equity to 15.0%. What profit margin would the firm need in order to achieve the 15% ROE, holding everything else constant?

• A) 9.45%
• B) 9.93%
• C) 10.42%
• D) 10.94%

---

Definitions:

Consolidated Balance Sheet

A financial statement presenting the total assets, liabilities, and shareholders' equity of a parent and its subsidiaries as one single entity.

Currency Exchange Rates

Currency Exchange Rates are the rates at which one currency can be exchanged for another, influencing international trade and investments.

Depreciable Assets

Long-term assets whose cost is gradually allocated over their useful life, reflecting a decrease in their value.