What is its assets turnover?

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Using the Du Pont method, evaluate the effects of the following relationships for the Butters Corporation.

a. Butters Corporation has a profit margin of 7.5 percent and its return on assets (investment) is 21.5 percent. What is its assets turnover? (Round your answer to 2 decimal places.)

b. If the Butters Corporation has a debt-to-total-assets ratio of 50.00 percent, what would the firm’s return on equity be? (Input your answer as a percent rounded to 2 decimal places.)

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c. What would happen to return on equity if the debt-to-total-assets ratio decreased to 35.00 percent?


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