Roland & Company has a new management team that has developed an operating plan to improve upon last year's ROE. The new plan would make the debt ratio 55%, which will result in interest charges of $7,000 per year. EBIT is projected to be $25,000 on sales of $270,000, it expects to have a total assets turnover ratio of 3.0, and the average tax rate will be 40%. What does Roland & Company expect its ROE to be? a. 21.82% b. 26.67% c. 44.44% d. 51.25% e. 17.65%

Roland & Company expect its ROE to be 26,67%

Explanation:

In order To calculate Return on Equity we need first ti calculate the following:

First taking Total asset Turnover ratio = Sales / Total Assets = 3.0, putting in values we get  3.0 = 270,000 / Total Assets

Total Assets = 270,000 / 3.0

Total Assets = 90,000

Secondly

Total liabilities / Total Assets = 55%  debt radio, hence 55% = Total liabilities / 90,000

Total liabilities = 55%*90,000

Total liabilities = 49,500

The next step is to calculate the Shareholders equity which is Total Assets - Total liabilities

Sharholders equity = 90,000-49,500 = 40,500

Now we can calculate the net income

Net income = EBIT- Interest - tax

Net Income = 25,000-7000 = 18,000 - (1-40%) = 10,800

Net income = 10,800

Finally, we can calcuate theReturn on Equity = Net Income / shareholders equity

ROE = 10,800 / 40,500

ROE = 26.67%

the most important factor in the

work process or industry is to retain the interest of the employee. and to

retain them, their salary or profit must be adjusted to the best value. unless

the employee does not do his job properly, employees must receive bonuses or

benefits to ensure them to stay in the company. it will actually make them stay

longer, make them feel important and reduce costs for hiring new employees.

explanation:

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