Based on the levers of performance listed below, what is the Return on Equity of Crabtree Industries below after increasing the financial leverage, the Assets to Equity ratio, from 1.3 to 2.3?
June 25th, 2022
Crabtree Insustries
Profit Margin = .23
Asset Turnover = 1.1
Assets/Equity = 2.3
EXPERT ANSWER
Return on equity = Profit margin * Asset turnover * Financial leverage
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Based on the levers of performance listed below, what is the Return on Equity of Crabtree Industries below after increasing the financial leverage, the Assets to Equity ratio, from 1.3 to 2.3?
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=0.58